Hot weather keeps wool buyers cool

16th October 2026

THE Australian wool market meandered down the slope this week with a lack of direction keeping the best wools firm or even slightly dearer, but the bread and butter wools drifting cheaper as buyers struggled to find any new orders.  By the close of auctions the 17 micron wools were 8 cents dearer in Sydney where a “Newcastle” catalogue brought in some of the best wools, to 9 cents cheaper in Melbourne where more China spec wools were on offer.  The 19 micron category was around 20 cents cheaper in Eastern centres and unchanged in WA as prices lined up across the country.  21 micron merino wools continued to drift lower as the average micron across Australia continues to broaden this season lifting relative volumes of medium merino wool.

In US Dollar terms the market was less affected with only a 7 cent drop for the AWEX EMI, compared to 17 cents in local currency terms.  In Euro numbers the market was 6 cents cheaper across the week but no doubt many of the Europeans actually saw quotes increase for their higher quality wools.  Chinese mills buying a whole range of types as they do these days saw prices half a yuan down compared to the previous week but more of an issue was the lack of fresh sales made with lacklustre demand still being reported from the trade.

The high wool price is still being blamed for the lack of business enquiry at present, with customers haggling over a few cents for hours, but in reality the lack of consumer activity is the handbrake and a reduction in price would not actually solve the issue.  With temperatures still hovering in the mid-twenties across China getting a customer excited about the new range of sweaters on the shelf is a tough assignment and so retailers are not asking for top-up orders at this stage.  Some manufacturers are hanging out, hoping for prices to drop further with some arbitrary targets of prices around the level of last Christmas which is circa 300 cents below current levels.  However when pushed to state how much they would then buy at this ‘dream level’ they are still very non-committal.  

So the price level is making it difficult, but it is not the answer to creating more demand for the wool market at present.  The problem lies with consumer confidence as every industry selling discretionary goods is facing the same problem.  Only the essential goods and services are doing okay as consumers must have some things.  Unfortunately a new woollen garment is not seen as a ‘must have’ by many.  The marketing boffins in the wool industry have done everything they can to position wool in the right place, with synthetic fibres continuing to emulate all of the attributes of the wool fibre as they also try to stimulate customer activity.  Can the industry actually stimulate customers or create demand – probably not, but it can and has positioned wool to capitalise on the opportunities when they come around again.

Headlines overnight do not provide much joy in the short term with disjointed and uneven global growth continuing to keep currency traders on their toes.  The AUD had been steadily appreciating against the USD during the week and broke through the .70 barrier only to suddenly drop back below .6950 when the US September CPI was announced.  Core CPI rose 0.3% m/m, above the 0.2% consensus and matching the rise in August.  The message for the markets was straightforward: inflation remains too hot and more rate hikes are firmly on the table, maybe on October 28th, but more likely in December.  This will in turn lift bond rates and borrowing costs for every other government around the world and obviously increase mortgage rates for those would-be consumers for woollen garments.

As Paul Edwards of HSBC pointed out the contrast between Europe, the US and China is becoming starker.  The US economy continues to power along benefitting from all the tech and AI spending although political turmoil is probably just around the corner.  China is feeding the appetite of a buoyant US consumer and industry.  While in Europe they seem to be stumbling from one crisis to another.  Whether it is the Russia/Ukraine implications, individual EU countries own political and fiscal concerns or now what seems to be emerging as a major hit to the long established manufacturing sectors.  The EU/China trade balance continues to become more one sided, and last week’s discussions in Beijing will take time to bear fruit and appear to be trying to shut the gate well after the horse has bolted.

The rose coloured glasses show that the American consumer is still spending and providing a market for textile manufacturers in China and Europe.  Profits flowing back to China in particular will help to stimulate that economy and given that they account for around 50% of our wool consumption it is important that they do well, even if it is at the expense of others in the short term.  Chinese government uniform orders continue to roll out and provide activity for the manufacturing sector and more importantly consume wool, particularly medium merino which we have ‘plenty ‘of at present.  AWEX noted that for the season to date we have sold nearly 12% less bales than last year and without any grower stockpile to draw upon this season the scramble to find enough wool in the back half of the season could be interesting.  Of course we still need that demand to draw it through the pipeline but hopefully as the weather cools and the retail festivities get cracking we will see an improvement.  With only 26,000 bales in Australia next week it will not take much of an improvement to move the market but we may need to wait until November to see a meaningful adjustment.

Damien Whiteley ELDERS District Wool Manager