The price of Australian wool has bounced back after a 20-year lull. Wool farmers are benefiting from the best prices for their product in two decades. Prices are steady for fine wool and medium merino wool. One reason for the strong market is demand from China. Australia produced 3,41,000 tons of wool in the financial year ending June 2017, 75 per cent of which was exported to China.

The price of wool spiked 10 per cent in the first half of 2017 with strong demand and limited supply, prompting the ongoing strong market for the commodity. The shortfall in wool came as a result of low rainfall across Australia stunting wool growth.

Wool demand will continue to grow in the European Union and the US, the major international markets for imported woolen clothing. Demand for luxury woolen textiles is rising in major international markets especially China.

Prices are expected to peak next year before easing in real terms as wool production increases. And, by the end of 2021–22, prices are expected to still be relatively high, at around ten per cent above the 10-year average in real terms. Australia’s wool exports are forecast to rise by four per cent in 2017–18.