Using micron premiums for breeding objectives

A micron premium is a measure of the relative value of fibre diameter and fleece weight in the wool market.

Fibre diameter is highly heritable and has some economically unfavourable genetic relationship with other traits.

Changing the relative emphasis of fibre diameter in a breeding objective and index requires careful consideration of the impact on other traits in the breeding objective.

Standard indexes for breeding objectives

MERINOSELECT™ provides a range of standard indexes designed for 4 general production systems that cover a broad range of Merino breeding objectives. These include:

• Fine wool – based on a Merino enterprise where most income is from the wool clip with a strong focus on reducing fibre diameter.
• Wool production – based on a Merino enterprise where most income is from the wool clip with a strong focus on increasing fleece weight.
• Sustainable merino – based on a Merino enterprise where income is balanced between sheepmeat and the wool clip. A large focus is placed on improving the quantity and quality of the wool clip combined with sustainability (to reduce wrinkle, dag and worm egg count) and reproduction traits.
• Merino lamb – based on a Merino enterprise that favours sheepmeat income relative to wool and has a strong focus on producing lambs from Merino ewes.

The relative economic value of traits in the MERINOSELECT™ indexes are based on bioeconomic modelling of the 4 general Merino production systems. This means the MERINOSELECT™ indexes are a sound starting point for commercial producers to establish, or revisit, a breeding objective for their flock.

They do not reflect the consistently high value placed on finer wool by the global wool trade. Micron premiums provide a simple measure of the current market value for wool.

Calculating micron premiums

Micron premiums quantify the percentage increase in price per kilogram for a reduction of one micron fibre diameter. 

For example, the 19 micron premium is the difference between the price of 19 µm and 20 µm wool, divided by the price of 19 µm wool, expressed as a percentage.

19 micron premium = [ (19 µm wool value - 20 µm wool value) / 19 µm wool value ] x 100

For example, if the value of 19 µm wool was 1,600 c/kg clean and the value of 20 µm wool was 1,440 c/kg clean the 19 micron premium would be 10%. 

Expressing micron premiums as a percentage provides a constant relative value over time, irrespective of the absolute price of wool. 

Historic fine wool values

Micron premiums for fine wool are reasonably consistent over time. For the past 5 seasons the average micron premiums for fine wool have been:

• 16% for 17µm
• 15% for 18 µm
• 11% for 19 µm.[¹] 

This has occurred despite variation in the overall market level of Australian wool sold at auction measured by fluctuations in the Eastern Market Indicator and increases in the weight of fine wool tested (a proxy for wool production) over the past 20 years.

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Linking micron premiums to breeding objectives

The global wool trade places a consistent high value on fine wool regardless of the overall level of the Australian market and volume of fine wool.

Micron premiums can help to link the market value for wool with the relative emphasis placed on fibre diameter and clean fleece weight in a Merino breeding objective. If micron premiums are:

• consistently high over time (around 15%) a larger emphasis may be placed on reducing fibre diameter while maintaining clean fleece weight
• moderate over time (around 7%) equal emphasis should be placed on reducing fibre diameter and increasing clean fleece weight
• consistently low over time (around 3%) a larger emphasis may be placed on increasing clean fleece weight while maintaining fibre diameter.

Micron premiums can assist with determining the relative emphasis placed on clean fleece weight and fibre diameter in a breeding objective.