The Australian wool market is experiencing high volatility

In December 2025, the Australian wool market exhibited typical year-end trends, characterized overall by high volatility with signs of weakening and a contraction in trading volume.

The market primarily saw a correction this month. Taking the Eastern Market Indicator (EMI) as an example, the index in mid-December fell by approximately 2.5% compared to the peak at the end of November. For key 21-micron Merino wool, prices fluctuated within the range of 1,200–1,250 AUD cents per kilogram (clean weight). While premium grades remained supported, mid- to low-grade types faced noticeable price pressure. In terms of trading volume, auction quantities decreased week by week due to the Christmas and New Year holidays. Market sentiment turned cautious, with procurement driven mainly by rigid restocking demand, while speculative demand diminished.

This adjustment was primarily constrained by dual pressures on the demand side: first, as the largest buyer, Chinese wool textile companies recently faced sluggish order growth, shifting their procurement strategy to small-batch purchases based on immediate needs; second, the relatively strong Australian dollar weakened the competitiveness of export-priced wool denominated in U.S. dollars. On the supply side, pastoralists maintained stable selling intentions, with no signs of panic selling.

It is expected that by the end of the month, the market will maintain a pattern of "weak consolidation." Downward price movement is limited, as global wool inventories remain generally low, and Australia’s new season production is projected to remain flat, with no fundamental shift in supply-demand dynamics. However, in the absence of robust procurement orders from China or positive global economic signals, prices will struggle to regain upward momentum. Trading volume will further shrink due to holiday factors, and the market may find renewed direction in mid- to late January, aligned with China’s pre-Lunar New Year restocking rhythm.

Overall, the December market is undergoing a phased adjustment, laying the groundwork for trends in early 2026.