Australian Wool Market Builds Momentum as Supply Tightens

According to March Market Report released by AWI the Australian wool market has shown a firmer tone through March, with increased buyer activity and strengthening competition – particularly from China – lifting prices off recent lows. There is also a renewed sense of optimism returning to the market, underpinned by improving demand and tightening supply.

Stronger engagement from China has been a key driver. According to AWI’s General Manager – International, Stephen Hill, buyers who had been waiting for more favourable conditions have started to move. “China has recently stormed back into the market for new greasy wool orders at the end of March,” Hill said. “Users waiting for a favourable buying opportunity have lost patience and jumped off the fence, followed by the Easter recess, the lower Australian dollar and the fear that post-Easter will be very low on supply.

” For woolgrowers, this shift is less about short-term price movement and more about renewed confidence on the buying side of the market – a signal that demand is beginning to re-engage. Market indicators reflected that stronger tone through parts of March, although the month finished a little softer than the mid-month highs. The benchmark Eastern Market Indicator (EMI) closed the last completed March sale at approximately 1,724 cents per kilogram clean, while the Western Market Indicator (WMI) finished around 1,893 cents per kilogram clean.

Importantly, at the final sale before the Easter recess, the Western Market Indicator pushed through the 2,000 cents per kilogram clean barrier, reflecting strong competition for Western Australian clips and reinforcing the upward momentum seen late in the month. Across March selling weeks 36 to 39, approximately 164,600 bales were offered nationally, with around 151,000 bales sold, pointing to solid throughput even as tighter supply remains a key market theme.

Improved clearance rates through the latter part of the month reflected stronger buyer intent rather than an increase in available wool. Attention is now turning more sharply to the supply side, where conditions are tightening. April and May are traditionally lower-volume months in the Australian auction calendar, but this year the seasonal dip is expected to be more pronounced.

“April and May are always a seasonal low point for auction volumes, however this year the message is getting through that any buffer of wool in store or on farm is gone, that is, there will only be what we shear as fresh wool available,” said Hill. With production forecast to fall by around 10 per cent year-on-year, and limited carryover wool in the pipeline, supply is expected to tighten further as seasonal volumes ease. “This is evidenced by the roughly 10 per cent forecast drop in production and AWTA testing at odds with the wool offered at only minus 4 per cent year to date,” Hill explained.

This disconnect suggests the full impact of reduced production has not yet flowed through to auction offerings, reinforcing the likelihood of tighter supply conditions in the months ahead. After a period of retracement earlier in the year, the market now appears to have stabilised. “The modest retracement appears to be done and now look for new higher highs,” said Hill.

While not a guarantee, current conditions are pointing to the potential for further upward movement if demand continues and external pressures remain contained. Global uncertainty – particularly ongoing tensions in the Middle East – remains a factor to watch, but the market has shown resilience in recent weeks.

“If we continue to defy the Middle East issues, next target is between 19 and 20 on the EMI,” said Hill. The current market is not without risk, but the fundamentals are shifting. Tightening supply, more active buying and improved competition are beginning to rebalance the equation. For woolgrowers, it is a more encouraging position than has been seen in recent months – supported by returning demand, firmer pricing signals and renewed confidence across the market.

Source: AWI