Wool Prices Edge Higher Despite Current Circumstances

Article by: Hari Yellina

Over the next five years, the standard Eastern Market Indicator (EMI) is estimated to rise, reaching an average of 1903 cents per kilogramme clean by 2026-27. The national commodities forecaster ABARES predicts an average of 1390c/kg at the conclusion of the fiscal year 2021-22, a 16 per cent increase over 2020-21. Wool prices are predicted to rise 19 per cent to 1663 cents per kilogramme in 2022-23, owing to ongoing demand for fine and superfine wool. The wool market has recovered from the price drop during the first stage of the COVID-19 pandemic, when the EMI plummeted to 930c/kg in October 2021, thanks to robust economic development in key wool markets.

Since October 2021, the price of 17-micron wool has risen by 47 percent to January 2022, whereas the price of 28-micron wool has dropped by 33 percent. The spike in demand for apparel-grade wool, according to ABARES, is reflected in the robust growth in fine wool prices. Strong economic development in industrialised economies is predicted to boost prices, with worldwide demand for wool rising by 2.5 percent in 2021-22. However, wool consumption is predicted to drop in 2022-23, with a gradual fall through 2026.27. Wet conditions and an expanding sheep flock are expected to boost Australian sheared wool production by 9.4% to 320,000 tonnes by the end of 2022, as the national reconstruction proceeds.

Despite a predicted decline in annual rainfall, production is expected to climb to 332,000 tonnes in 2022-23, with the Australian flock size expected to increase by 2.1 per cent to 71.9 million heads. Global wool production, on the other hand, is anticipated to continue its long-term decrease to avoid large increases in wool prices by substituting other natural and synthetic fibres.  Global wool production is only expected to increase by 2% to slightly over 1 million tonnes in 2021-2022. By the end of 2023, wool cut per head in Australia is expected to reduce by 3 per cent, to 4.4 kg per sheep.