Wool: Cycles
How Chinese mills and fashion drive the price
What this tab covers Price history and what drives booms and busts, including this commodity's super-cycles, the drivers behind them and the metrics to track. It charts monthly prices (World Bank) with a switch to inflation-adjusted annual prices; where there is no World Bank series it uses USGS US prices.The usual price benchmark is the Australian Wool Exchange's Eastern Market Indicator, set at the weekly auctions. Prices are driven by Chinese processing demand, fashion and the economic cycle, since wool garments are discretionary. Blas & Farchy note that China's boom made it the largest consumer of wool, among other raw materials. Flocks take years to rebuild after drought, yet Radetzki & Wårell class wool's short-run supply as fairly elastic, which they say makes producer cartels unpromising.
No public benchmark price series for this commodity in the datasets used. Many minor materials trade on private contracts.
Super-cycles in wool
Wool's long-run story is decline. World greasy wool output fell from 3.35 Mt in 1990 to 1.70 Mt in 2024 (FAOSTAT) as synthetic fibres took over and farmers switched to meat and crops. Prices have moved in sharp cycles around that trend: wartime and Korean War booms, the collapse of Australia's price floor in 1991, and swings with Chinese buying since. Radetzki and Warell note that wool supply responds quickly to price, which makes producer cartels hard. Prices recovered in 2025-26 as the Australian clip shrank: the Eastern Market Indicator rose from about 1,541 Australian cents per kg clean in Dec 2025 to 1,890 in Sep 2026 (AWI).
- 1950-1951
The Korean War triggered stockpiling of wool for uniforms and a short, extreme price spike, part of a wider commodity boom.
No price figure sourced; Radetzki and Warell describe the Korean War price spikes as a driver of later commodity agreements
- 1974-1991
Australia's Reserve Price Scheme set a floor price. In the late 1980s the floor was raised too high, demand fell and the scheme bought a huge stockpile, then collapsed in 1991.
No price figure sourced; Australia's clip peaked at 1,102 kt in 1990 and fell to 671 kt by 2000 (FAOSTAT)
- 1990-2020
Synthetic fibres, warmer homes and casual dress cut demand, and farmers cut flocks.
No price series sourced; world output fell from 3.35 Mt (1990) to 1.73 Mt (2020) (FAOSTAT)
- 2025-2026
Australian flock and clip fell after drought and a record sheep turn-off, while Chinese demand held up, lifting prices.
Eastern Market Indicator about 1,541 Australian cents per kg clean (Dec 2025) to 1,890 (Sep 2026), equal to 1,350 US cents per kg (AWI)
What drives the cycle
- Chinese demand. China buys about three-quarters of traded greasy wool, so its textile output and consumer demand set prices.
- Australian flock size. Drought, lamb prices and crop returns decide how many Merinos are kept; Australia supplies two-thirds of exports.
- Synthetic fibre prices. Polyester and acrylic are cheaper substitutes in knitwear and carpets; their cost follows oil.
- Fashion and workwear habits. The shift from suits to casual wear cut demand for worsted fabric.
- Exchange rate. Wool is auctioned in Australian dollars, so a weak Australian dollar supports local prices.
Metrics to track
| Metric | Why it matters | Where to track it |
|---|---|---|
| Eastern Market Indicator (EMI) and micron price guides | Weekly benchmark price for Australian wool | AWEX; AWI weekly price reports |
| AWTA key test data (monthly) | Shows the volume of wool coming to market | Australian Wool Testing Authority |
| Australian Wool Production Forecasting Committee estimates | Official clip forecast | AWI |
| China wool imports and textile output | Demand signal from the main processor | China Customs; National Bureau of Statistics of China |
| World production by country | Long-run supply trend | FAOSTAT |
| India wool output by state | Domestic supply trend | DAHD Basic Animal Husbandry Statistics |