The greasy wool market opened the New Year with a bang last week, as it does occasionally. This article takes a look at the opening price rise and how it sits with past behaviour in the market.
Wool, as part of the greater apparel fibre market complex, tends to follow the general path of apparel fibre prices such as cotton, polyester, acrylics, and the cellulosics. Occasionally it has gone its own way, usually in the decades since the mid-20th century when official stockpiles had been liquidated. This season it has gone its own way again, with apparel fibre prices at lowish levels and drifting lower. Low stocks in the supply chain and falling production in most regions seem to have been the spark for the rally in price since mid-2025.
Figure 1 shows the change in price in the first week of Australian auction sales following the Christmas recess from 1993 to this year, for the Eastern Market Indicator (EMI) in Australian dollar terms. The EMI is a good measure of movement in the average price of all wool sold in the Australian auction market. Last week the EMI rose by 7%, which is in the top decile of first-week price changes since 1993. It was a strong start, but well behind 2002, 2007, and 2011.
Figure 1 shows the seasonal propensity for prices to be stronger after the Christmas recess. Figure 2 extracts the seasonal price pattern for the EMI for the past decade, by sales week for the season running from July to June. Price weakness in the spring, centred about sale weeks 13-15, remains a feature of the market although that pattern was completely ignored this season (as it was in 2002-2003). Price then tends to firm up from the spring into January/February (weeks 28 to 36). A lift of 2-3% has been the median effect during the past decade for the EMI, so the 7% rise last week was a little more than double this pattern.
Last week’s price rise is now part of history. Can it tell us anything of the future? Figure 2 compares the change in price for the EMI in the first sale after Christmas, from 1993 to 2025, and the difference in the average value for the EMI in the second half of the season versus the first half. The good news is that where the post-Christmas rise is a strong one, it tends to be correlated with a higher second-half price.
There are six instances of price rises of 5% or more, with the second-half average EMI being 8% or more above the first-half average. Keep in mind the rise last week was 7%, so this piece of history suggests a stronger second half for the EMI.
What does it mean?
Market fundamentals for merino wool remain positive on the supply side (low stocks and falling supply) with more uncertainty on the demand side. However strong price rises following the Christmas recess (as happened last week) tend to be positively correlated with higher prices in the second half of the season compared to the first half.
Key Points
- The price rise in the EMI last week, from pre-Christmas levels, was in the top 10% of rises since 1993.
- January wool prices tend (not always) to rise for the EMI by 2-3% during the past decade, the 7% rise last week was quite strong.
- Past rises of 5% or more have been correlated with higher second half average prices for the EMI.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: AWTA, ICS, AWEX, Mecardo
