The Australian wool market has entered a period of controlled firmness, underpinned by resilient buyer demand yet tempered by pricing volatility and tightening export conditions. The Eastern Market Indicator (EMI) remains elevated at 1500+ ac/kg, retreating slightly after the sharp gains recorded earlier in the month. Auction volumes surged by more than 30% as seasonal shearing intensified, while clearance levels hovered at a robust ~90%, signalling strong absorption despite cautious sentiment among global textile mills.
Fine and medium Merino categories experienced modest corrections, though Merino skirtings and cardings recorded incremental gains. Year-on-year indicators continue to show exceptional strength, with the EMI now sitting more than 30% above November 2024 levels, highlighting the structural tightness of global wool supply.
Export flows tell a more conservative story. Season-to-date shipments remain 9–10% lower, reflecting reduced national production and a smaller clip entering the market. China continues to dominate demand, accounting for 85–88% of Australia’s wool exports, while India, Vietnam, Turkey, and Italy are showing emerging yet inconsistent growth. Currency movements have provided temporary relief—periodic softening of the Australian dollar has boosted international competitiveness—but volatility remains a constant factor for exporters managing tight margins.
Global shipping conditions continue to shape the operating environment. Persistent congestion in Singapore and Port Klang, combined with ongoing Red Sea diversions, is causing transit delays of 5–12 days into key textile hubs. Carriers have issued additional BAF and PSS surcharges, adding cost pressure across both FCL and consolidated movements. Exporters operating out of Melbourne, Sydney, Fremantle, and Brisbane should anticipate fluctuating equipment availability and increased freight rates heading into early 2026.
Market Implications for Exporters
For Australian wool exporters, these intertwined market forces create both opportunity and complexity. The elevated EMI continues to support favourable revenue conditions, yet the volatility observed in recent auctions increases the risk associated with longer-term price commitments. Reduced national wool production is limiting available volumes, intensifying competition for premium fine and superfine Merino lots. The sector’s heavy reliance on China — which absorbs close to 90% of exports — adds another layer of vulnerability, exposing exporters to shifts in Chinese industrial output, demand cycles, and currency pressures. At the same time, global shipping disruptions, from port congestion to Middle Eastern rerouting, are extending delivery lead times and raising overall logistics costs. Together, these dynamics demand that exporters balance strong pricing opportunities with disciplined planning and risk management.
Strategic Priorities for the Months Ahead
To operate effectively in this environment, exporters must adopt a forward-leaning strategy. Securing short-term forward contracts can lock in favourable price levels and shield exporters from week-to-week auction movements. Expanding beyond China by cultivating buyers in India, Vietnam, Italy, Turkey, and the Czech Republic will help mitigate market concentration risks while opening higher-value market channels. With global congestion expected to persist into 2026, exporters should book shipping allocations earlier and explore alternative routings to reduce the risk of rollovers and delays. Managing foreign exchange exposure—whether through hedging or structured conversion triggers—will also be essential to preserving margin stability. Enhanced quality assurance, comprehensive bale specifications, cleaner packaging, and transparent testing documentation will strengthen buyer confidence. Proactive, regular communication regarding ETDs, ETAs, and shipment status will be critical in maintaining trust during periods of logistical uncertainty
Sources: AWEX, AWI, ABS, Fibre2Fashion, Reuters, UNCTAD, Maersk/MSC/CMA CGM advisories, TradingEconomics.
Disclaimer – Market data is from public sources we consider reliable but has not been independently verified; accuracy is not guaranteed