Wool market realigns

September 18, 2026:

A WEEK of realignment and reflection for the Australian wool market this week as the previously mentioned price resistance came to the fore enough to drag prices lower. It was not a shellacking by any means, and most people in the trade are still confident that the upwards trend will be re-established again once demand picks up. It does however give processors a chance to build some stocks at better price levels and the largest combing mills took that opportunity during the week both in Australia and also in South Africa.

The wool market in Australia eased by 21 cents according to the AWEX EMI and it was very selection dependant with a better quality catalogue in Sydney almost holding its ground on Tuesday before that market also succumbed to the general adjustment on Wednesday. By the close of the week’s auctions the EMI had lost 34 US cents, and 20 Euro cents and possibly most importantly 2.2 Chinese yuan per kilo. Plenty of travellers have descended on China hoping to sell some of their meagre stock containers before attending the Nanjing Wool Market Conference. Perhaps the Chinese trade collectively stepped back this week in anticipation of travellers bringing bargains, or perhaps the price adjustment was simply overdue and happened to coincide with the conference. In past years we have often seen a bounce either side of the September conference but it never lasts very long as seasonal demand does not arrive until at least October.

So, by the time next week rolls around everyone will have offloaded their stock, some will have purchased a bargain, and plenty of Tsingtao will have been consumed. No doubt all the visiting exporters, brokers and growers will underline the declining production in all of the wool growing nations, not just Australia. And no doubt the Chinese processors and retailers will underline the difficult economic circumstances they are faced with. Chinese retail growth figures released during the week showed an increase of just 0.4%, against an expectation of a gain of 0.8% for the month. Industrial production was up by a respectable 5.25% as they continue to try and export their way out of trouble, but the local consumers are not buying into it or so it seems. Hardly surprising when the previous major driver of their domestic economy which was housing continues to be in the doldrums with a decline YTD of 19.9%.

A relatively flat period has the wool market somewhat becalmed at present, but again it is not that unusual given that we are only in the middle of September and retailers are still trying to clear the last of their summer stocks before loading up the shelves with winter items. In another couple of weeks China will celebrate National Day (October 1st) and with a week’s holiday for those in the major cities and government workers the retail season will hopefully open with a flurry of activity. Railing against this are the current temperatures which are still pushing 30 degrees in Shanghai and Beijing today and of course the consumer wellness. In previous years the Chinese government has supported their domestic retailers with a series of coupons and vouchers to stimulate activity, but it appears that Beijing’s coffers have run dry and although their economy is running slightly below target they will continue to focus on exporting goods to the rest of the world.

The world’s largest consumer market, the USA, continues to grow despite the Fed Reserve lifting interest rates there this week in an effort to dampen ongoing inflation. Retail sales actually rose by 1.2% for the month (above the 0/8% forecast), the largest increase in five months. Despite rising fuel prices and the fading impact of tax refunds the data suggests US consumers continue to spend which is good news for those manufacturers servicing this huge consumer base. Merino wool has made serious inroads into the American market in recent years. Not that American’s are suddenly wearing more sweaters or suits but the changes where wool is being used more nowadays have slotted nicely into the American wardrobe. Active wear, T -shirts and polos, casual jackets and pants as well as base layers and thermals all consume a far larger proportion of the merino clip these days and are much more attractive products for the American market. However the suiting market is still a thing in the USA as well and some of those suppliers of worsted fabric for men’s and women’s wear have been slowly but steadily recovering since Covid brought everything to a screeching halt.

Europe remains a concern for the wool trade with many there diving back into their burrows during the week once they saw a declining market. Initially after they returned from summer holidays and the market was ‘on the up’ European processors were cautiously starting to gear up. Prompt stock had been flowing from the warehouses to spinners and knitters and the picture was getting rosier. Suddenly the air has gone out of the tyres as Mr Putin ramps up his rhetoric, just in time for today’s ‘special electoral operation’ to elect some new politicians to the Duma, Russia’s parliament. Whilst it no doubt serves him well in the domestic political scene it is obviously more than a little unnerving for those Europeans countries close enough to see a few stray drones flying overhead. Like elsewhere in the western world the annoying inflation issue has still not been resolved and again the ECB will raise interest rates again which will make it that bit more difficult in the short term to convince consumers to update their wardrobe.

Everyone in the wool trade understands that the market is just biding its time, and going through the motions at present, and also expects that it will not take much of a spark to light a fire under this market again. Everyone clearly remembers late September last year when things got quite heated with price rises of more than a dollar in a week which could easily happen again given that supply is actually quite a bit tighter this season. Interesting times lie ahead.

Damien Whiteley, Elders District Wool Manager