Here’s a bold statement: the wool market’s recent surge is both thrilling and precarious, and understanding why could save you from a costly misstep. But here’s where it gets controversial: while many celebrate the price rally, others argue it’s a bubble waiting to burst. Let’s dive in.
After years of lackluster performance, the greasy wool market has been on fire, with prices soaring since June/July. The question on everyone’s mind: is this rise driven by genuine demand, supply constraints, or a mix of both? And this is the part most people miss: while strong price increases grab headlines, they rarely last forever. It’s time to explore the potential short-term risks lurking beneath the surface.
Some believe market commentary should always be positive to encourage buying. But here’s a counterpoint: this view underestimates the sophistication of supply chain decision-makers, who are more than capable of assessing risks independently. As John Maynard Keynes famously quipped, ‘markets can remain irrational longer than you can remain solvent.’ So, while optimism has its place, it’s crucial to stay grounded in reality.
Since mid-2025, prices for 15 to 22 micron wool have climbed 26% to 37%, or 400 to 600 cents per kg clean. Crossbred wool hasn’t been left behind, with the 28 MPG category surging by 64%. But here’s the catch: such rapid rises often push greasy wool prices out of alignment with top and yarn prices. Eventually, the momentum will wane, and the market will test how much of this gain is sustainable.
Now, let’s talk downside risk. Without a crystal ball, we can use historical data to estimate potential price corrections. A 25% retracement—giving back a quarter of the gains—would see Merino prices drop by around 6% after their recent 35% rise. For crossbreds, the fall could be closer to 8-11%. But here’s where opinions diverge: some argue these corrections are minor and healthy, while others fear they could signal a deeper downturn.
Here’s a thought-provoking question: Is the current wool price rally a sustainable shift or a temporary spike? Share your thoughts in the comments—we’d love to hear your perspective!
Key Takeaways:
- Merino and crossbred wool prices have surged in recent months, particularly in September.
- Price rises will eventually lose steam, leading to short-term corrections.
- A 6-9% correction for Merino and 8-11% for crossbreds would be minor, given recent gains.
What does this mean for you? Price volatility is a double-edged sword. While the return to 2019 price levels is encouraging, the likelihood of a correction is high. Staying informed and prepared is key.
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