Another off week for wool market

2nd October 2026

The Australian wool market had another ‘off week’ with prices continuing to drift lower with a growing quality disparity evident across the catalogues.  Buyers can afford to be more selective when they do not need large quantities and this is certainly the case at present with most mills only buying the bare minimum each week.  The risk to build stock under the current market conditions was seen as too great based on their customer’s outlook, and this has been vindicated by the slow and steady decline in auction prices over the past three and a half weeks.  However those who wait too long or push the friendship too much may find themselves chasing a runaway train at some point as the general belief among the trade is that ‘at some point’ this thing will turn around and take off.

Of course demand is the key, and that is sorely missing at present, but as had been said many times we are still in the quiet processing period, or the JASON period where mills are talking to customers about the upcoming retail season and also starting to make samples and showcase their collections for next year.  By the end of October or November mills will need more raw material and hopefully have actual orders to produce against.  The pipeline is so empty at present that spinners trying to bear down the prices for already cheap prompt lots in Europe are being met with derision from traders who know that sooner or later there will be a mad scramble for these very same stock lots.

Chinese traders have taken the opportunity of their National Holidays this week to hunker down and avoid making a decision, but there are also anecdotal reports that some more business has been done this week perhaps by those who seek to operate in a different pattern to the herd mentality of the bulk of the trade.  With the changes in the Australian clip this season, much more medium merino and less fine merino the headline numbers on the market reports are a little misleading depending on which segment one is operating in.  

The Melbourne catalogues contain a plethora of long and over-long medium wools, which are not great for processing, and not in demand at present given the price resistance still evident in the worsted fabric sector.  Sydney catalogues tend to be much better quality, albeit smaller and focussed on finer types more suitable for the knitwear trade where demand is still ticking along quietly.  Fremantle lines up closer to the Melbourne selection as usual.  This creates a situation where we have two distinct markets with the finer better quality wools holding their level, but the coarser more plentiful wools still falling and we actually saw a triple digit decline in the 21 micron MPG in Fremantle this week.

The South African market resumed trading again this week after a week off as many buyers and traders had been in China attending the Nanjing Wool conference.  Their auction market had to play catch up after the week off and fell by around 5% in USD terms which was slightly more than the Australian market over the corresponding two week period and alsoexperienced a similar pass-in rate of around 13%.  Australia’s market lost 26 cents in local currency terms this week and with a large currency movement the prices in US Dollars dropped by 42 cents.  The Aussie Dollar has continued to decline further since the auctions closed, so may provide a bit more protection for growers with wool to sell next week.

Just how far away we are from seeing the required uptick in demand to turn the wool market around is very difficult to predict.  Everyone agrees that it will come, but exactly when is the million dollar question.  Traditionally the Golden Week holiday in China is the beginning of the retail season there, and although temperatures have eased from the 30 degree mark back to the low 20’s now, it is not exactly cold yet.  More importantly the Chinese economy, like most economies in the world, is struggling for traction and consumers are concerned about the outlook.  The Chinese government did recently announce a new round of stimulus but specifically targeted at the “Six Networks” rather than their usual broad based consumer bailout.  These networks or pillars include water systems, power grids, computing capacity, next-gen communications, underground urban pipelines and logistics networks, which are all sound nation building projects but will not enhance consumer activity in the short term.  

The wool textile industry in China however remains a significant player, employing around a million people and will no doubt still be on the government’s radar even if not headline generating.  The many millions of government workers are still entitled to new uniforms each year or so and these orders will continue to roll out along the production chain.  The retail sector in China is also a huge and important employer and will be working on new initiatives to move goods off shelves in the coming months. Although they are taking a cautious approach at present given that retail activity rose by just 0.4% in August a market of 1.3 billion people needs to be clothed during a cold winter.  Even with no increase in activity from the previous year, China will still consume a lot of Australian wool, and we are likely to produce less of it this year.  Hence the longer term optimism among the trade even if the next short period of time may see the market continue to drift.

Damien Whiteley, Elders District Wool Manager