Just enough wool is good enough

IT was a very solid wool market in Australia last week without anybody getting too carried away.  

Although numerous reports from overseas indicate that spinning mills are struggling to maintain processing activity,  the small supply from virtually all producer countries and the requirement to keep raw material inventories topped up is keeping the greasy wool market on a slowly rising trajectory.  

This disconnect between sections of the processing pipeline will have an effect at some point, but for now there is not too much stress on the piece of elastic.

The AWEX EMI finished the small two-day East Coast-only sale week 30 cents dearer.  In USD terms it was 22 cents higher and in Euro terms also closed 22 cents up.  

Buyers in auction continued to battle hard for the small volumes of better tested lots and some of these traditional European spec wools were close to $1 dearer for the week.  

Best topmaking fleece wools gained 50 cents, while the small broker catalogues meant that even the higher vm, tender wools had plenty of competition and rose by as much as 50 cents.

The skirtings market followed suit with buyers particularly keen on the finer edge with 17.5-micron pieces destined for the next-to-skin active wear market performing very well.  

Crossbred wools continued to outperform the merino segment with no volume of note available in the Sydney catalogue buyers were very aggressive in Melbourne and pushed the indicators up by as much as 50 cents which for the 30 micron equated to an 8 percent jump.  

By comparison the highest percentage increase in the merino sector was 2.5.  Cardings also enjoyed a strong week with limited volumes contributing to a price increase of 50 cents in Melbourne.

In South Africa the second-to-last sale for the season saw brokers clean out the sheds and gather up the odds and sods to sell.  

Roughly half of the catalogue of 5000 bales was less-than-full-length wools, but buyers nevertheless scrambled to fill shipping containers and the market there closed up by 4 per cemnt which was roughly in line with the Australian market over the past two weeks.

The remainder of the South African 2025/26 wools will be offered next week, with another 5000 bales up for grabs before they shut down for their eight or nine-week winter recess.

New Zealand did not sell last week.

Thus far, the wool market has behaved in a very normal manner, albeit driven mostly by low supply concerns rather than the usual demand signals.  

Since the price rally began in earnest back in October 2025 the market has gained a bit more than 80 per cent.  

In a ‘normal’ rally it would add 100 per cent of the low point prices so perhaps there is a little way to go, or perhaps this supply squeeze driven market will run out of momentum before we reach the magical doubling of prices.  

Certainly most people in the industry would be happy to forego the final 20 per cent if it meant that we also did not have to endure the usual rapid price adjustment after reaching the peak.  

The various greasy wool forecasts from around the globe all point toward lower production again next season so the supply squeeze has not gone away and so the price downside still appears to be limited.

There will be some price adjustment as the processing season winds down for the northern hemisphere summer holidays, but nobody is foreshadowing a price crash nor does anyone want it.  

Such volatility as we saw back in 2011 when prices rose by 150 per cent and then corrected by 60-odd per cent, all in a matter of months didn’t help anyone no matter where you sit in the wool pipeline.

So, hopefully with a reasonable body of demand still present and supply still tight, the greasy wool market can maintain some semblance of normality into the new season even with the prospect of a global recession looming.  

That does appear to be the fly in the ointment at this stage with the wool market actually very well balanced in terms of supply and demand, but it could still be knocked off its podium by a decent global recession.

Japan is struggling to maintain oits economy with the war in the Middle East having a dramatic effect as they normally import 90 per cent of their crude via the Strait of Hormuz.  

 Europe is muddling along but still getting other countries lining up to join the bloc with Ukraine and Moldova likely to be the first cabs off the rank.

The USA is seemingly immune to the Middle East crisis, at least in an economic sense.

Manufacturing jobs recently hit a four-year high with factories hiring more workers.  A healthy labour market may ease fears of a slowdown,however, it may induce inflationary fears for the Fed Reserve.

Elsewhere, the Chinese economy is struggling to maintain growth but no doubt the official statistics will meet the government’s target.

The wool market this week had only 26,000 bales on offer nationally and still ‘just enough’ late season demand to keep the wheels turning but the clock is definitely ticking towards the annual processing shutdown.