The sharp rise in the EMI in the past 12 months and particularly in the past month has been terrific news for Australian woolgrowers who grow Merino wool and all growers around the world who have Merino sheep. The move above the $20/kg mark is indeed momentous. However, the record nominal level is illusory as it does not allow for inflation: $1 now is worth less than it was 5 years ago, 10 years ago, 30 years ago. It is worth looking again at prices in real terms (i.e. adjusted for inflation).

Without adjustment for inflation, the current EMI is 445 cents above the peak EMI of 1582 c/kg in April 1988. However, once inflation is taken into account, the current level is dwarfed by the real terms EMI in April 1988. In real terms, the EMI in April 1988 was 3638 c/kg, 1600 c/kg higher than the current EMI of 2027 c/kg. This is a massive difference and is pause for thought amidst the acclamations, excitement and amazement about the current market. The 1986-88 Supercycle was truly a monster that will take a lot of beating. While the current Supercycle has broken new ground, having run for a record 114 weeks and counting (above the 111 weeks for the Supercycle in 1986-88), it is still dwarfed by the extent of the rise in prices in the 1986-88 Supercycle.

Further details including a chart showing the current EMI in nominal terms and in real terms from the 1980s to now are provided in the full version of the NCWSBA Weekly Newsletter, available to NCWSBA members.