Four countries, one global trend – what we heard at the Nanjing Wool Market Conference

I have recently returned from the Nanjing Wool Market Conference, where there were a record number of Australian growers, with just over 100 in attendance. The room heard from a number of organisations including the China Wool Textile Association (CWTA), Australian Wool Innovation (AWI), the National Council of New Zealand Wool Interests and Cape Wools South Africa.

Four presentations, four countries, four sets of data, however they told the same story and that is that global wool supply is shrinking.

AWI put Australian production 69 per cent below where it sat in 1992-93, with 249 million kilograms forecast for 2026-27. The New Zealand Council reported 22.8 million sheep excluding lambs at 30 June, down 2 per cent year-on-year and a 17 per

cent decrease since 2016-17,with wool volumes down from 142 million kilograms in 2020-21 to 113 million. Cape Wools reported a South African clip of 38.1 million kilograms, down almost 4 per cent. As an aside, AWI also noted that United Kingdom production is more than half of what it was in 1990.

And with the lower production volumes, prices have responded. The CWTA reported that China's raw wool import volumes rose 4.8 per cent in the first seven months of this year, while the average price paid rose 41.9 per cent, to US$8.74 per kilogram. New Zealand's strong wool indicators roughly doubled in United States dollar terms over the past year. The South African market indicator is at multi-year highs, while our own Eastern Market Indicator has climbed steeply since 2024.

AWI summed it up in six words: fewer fibres, more competition, greater value. On the evidence presented at the Nanjing Wool Market conference, that is exactly what is happening.

The CWTA provided insights into the consumer side of our supply chain and reported that average profit margins across Chinese wool textile enterprises were 3.2 per cent for the first seven months of 2026, while in weaving, margins were 2 per cent. In news that no grower wants to hear, but which comes as no surprise, high raw material costs were named as one of the industry's three main challenges, alongside a complex trade environment and growing divergence between processing segments.

When processors are paying 41.9 per cent more for their raw material while running on margins of 2 to 3 per cent, that is a strained position for any business to be in and is worth understanding by growers.

In saying that, let me be clear about what I am not saying. Woolgrowers have worn years of returns below the cost of production, and nobody should apologise for, nor expect anything less than better prices. But if we want these prices to be durable rather than a spike, we need to know where the pressure sits in the chain, and to watch whether demand for the finished product holds up.

The Australian trade for a number of years has been explaining to our Chinese counterparts that the reduction in supply is directly correlated to the depressed prices that growers have been receiving and that we are in direct competition for land use from other commodities – a fight that the wool industry is unfortunately losing, which is therefore reflected in production volume trends.

If we are to see certainty of supply, we need prices to remain and keep pace with rising input costs at sustainable levels across the supply chain. The only way that this can happen is if there is adequate demand for wool from the retail end.

On that, the signals are mixed. AWI showed the value of wool apparel imports falling since 2015 in the United States, Japan and the United Kingdom, with France, Italy and the Netherlands moving the other way. The CWTA reported, unsurprisingly that its industry's exports to the United States are down 24.8 per cent, with China's share of that market falling to around 11 per cent as India and South-East Asia picked up the work. Meanwhile China's share of Japanese imports rose, and its European position held firm.

Another point to note is that garment making is moving around the world. Wool demand is not disappearing, but it is relocating.

An interesting point to consider is where each country's wool goes. China takes 89 per cent of Australian wool exports, and further drilling down on that China takes 93 per cent of our wool at 19 micron and finer. They also buy 85 per cent of South Africa's and 44 per cent of New Zealand's.

That concentration is a strength while China is buying, and it is why the current price story is as strong as it is. It is also a single point of exposure, and both things are true at once. Diversifying markets is a long game, particularly with only one processing facility left domestically, but it is a conversation the industry needs to keep having, not one to revisit only when something goes wrong, and that is exactly why WoolProducers continues to explore and build relationships in the emerging markets of Vietnam, India and Bangladesh.

It was of note that Cape Wools' presentation outlined how South Africa has RFID-tagged every wool bale, identified and digitally mapped more than 10,000 farms across nine provinces, and connected more than 30,000 producers. Processed wool now carries a digital product passport, reached by scanning a QR code, showing origin, batch, weight, production date and certification, and while the Australian trade is putting in place a number of wool traceability components, it is the fact that two-thirds of the South African Merino clip is sustainably certified, compared to around ten per cent of Australia’s clip, and this is of interest because certified wool trades at a premium.

It also matters because the demand for this provenance information is coming from the other end of the chain. The CWTA listed clean production, sustainable supply chains and adapting to international green trade rules among its four industry priorities. Buyers are being asked to prove things about the wool they purchase, and they will ask us in turn.

Cape Wools also reported on biogenic carbon research suggesting the carbon intensity of wool production is considerably lower than earlier estimates from the currently accepted methodology and may even be negative. TÜV SÜD (a German certification company) has issued a conformity report on the method stating that the research was done in accordance with ISO14026:2018 and has prompted further on-farm assessment. Australian farms are among the case studies, with initial results due in December 2026 and third-party review early in 2027.

If that work stands up to scrutiny, it is genuinely useful to not only woolgrowers but to other broadacre production enterprises. That is precisely why it needs to be robust. We will be following the methodology, the funding and the way soil carbon is measured, well before any of it is used in market claims.

At the conclusion of the conference, the three things I have taken away were; that scarcity has handed woolgrowers the strongest position we have had in years, and how we use it matters. The people buying our wool are customers, not adversaries, and they are also under pressure. And being in the room counts, because the conversations that shape how our wool is bought are happening whether or not Australian growers are represented at the table, which is why it was so pleasing and also important, that so many of our growers took the opportunity to attend and hear firsthand the realities of their industry and its long supply chain.

Jo Hall

CEO, WoolProducers Australia