Wool production volumes have been under strong downward pressure during the past year as a combination of dry seasonal conditions, increased costs, and low prices have resulted in lower per head production and lower sheep numbers. This article takes a look at Australian wool production trends.
Exactly how much of the recent decrease in wool is structural (more or less permanent) and how much is cyclical (recoverable when seasonal conditions allow) will only be known in a year or two’s time, given median rainfall or better. Sentiment indicates a large proportion of the change is structural, but sentiment is largely driven by seasonal conditions, which, thankfully, look to be changing, although Western Australia is downsizing its flock (see more here).
To put the current season’s merino production in context, Figure 1 shows the estimated merino proportion of annual AWTA volumes from the early 1990s to this season. Auction proportions of micron categories, yields, and bale weights were used to convert the AWTA data. The current season volumes have been adjusted up pro-rata up for a full season, using July to May data as a base.
Merino production this season will be some 12% down on last season in clean volume terms. This is not quite as low as the 2019-20 season volumes, but that was an exceptional year because of the pandemic, with a sizeable increase in grower stocks. Given that caveat, it seems reasonable to declare the merino volume this season to be the lowest in the post-Reserve Price Scheme period (since 1991). The downward trend in merino production from the early 1990s to around 2010 saw clean volumes drop by 63%. After 2010, the volume steadied. Now the question is, where from here?
Figure 2 shows a similar graphic for non-merino wool. Unlike merino production, non-merino production has not trended lower during the past three decades. It has varied between 40 and 55,000 clean metric tons of production annually. The dry seasonal conditions in South Australia and Victoria have had a big impact on production this season, which is down 14%, although still within the normal range of the post Reserve Price Scheme.
Within the merino production, there has been a big change between micron category volumes as Mecardo looked at in mid-February (see article here). To further demonstrate this, Figure 3 shows the proportion of 23 and 24 micron categories which were merino by season for the past three decades. It clearly shows these two micron categories changing from being nearly fully merino to being effectively fully non-merino. This is old news. Figure 4 shows the same trend for 21 and 22-micron wool. So far this season, only 58% of 22-micron sales are Merino, while the 21-micron category has dropped to 91% Merino. The 21-micron category has long been a stronghold of Merino production—it’s a key micron range still widely quoted and used throughout the supply chain. However, from an Australian merino production perspective, it is 2.5 microns broader than the average merino fibre diameter, well over a full standard deviation broader for the statistically minded.
What does it mean?
Merino production is under downward pressure, mainly on the broader side of Australian production (which means broader than 18.5 micron). Non-merino wool production this season, while well down, is still within its range of the past three decades. How much of the current drop in merino production is cyclical will only become apparent in 2026, assuming median rainfall or better in the second half of the 2025 calendar year.
Key Points
- The 2019-2020 season ignored the current season’s merino production will be the lowest in the post-Reserve Price Scheme era.
- Non-merino production will be down by around 14% this season (in clean terms), still within the range of annual production seen in the post Reserve Price Scheme era.
- The merino component of the 22 micron category is falling away, with 21 microns starting to fall as well.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: AWTA, AWEX, ICS , Mecardo
