Where does wool come from?

In 2024 China produced 364,481 tonnes of greasy wool, 21% of the world's 1.7 million tonnes (FAOSTAT). Australia followed with 17%, then New Zealand (7.4%), Turkey (Türkiye) (5%) and United Kingdom (4%). The top five account for 54% and 69 countries reported a clip.

Volume is a misleading measure here, and this is the key to reading the table. Wool is priced overwhelmingly by fiber diameter, measured in microns, and the difference between grades is enormous. Fine merino wool of seventeen to nineteen microns goes into next-to-skin apparel and sells for several times the price of coarse thirty-micron wool, which goes into carpets and felt. A country producing a large tonnage of coarse wool earns far less than one producing a smaller tonnage of fine merino, so the production ranking and the revenue ranking are different lists.

Australia dominates the fine apparel wool that the price series on this page tracks, from merino flocks on the inland pastoral zone of New South Wales, Victoria, South Australia and Western Australia. New Zealand's clip is mostly stronger crossbred wool destined for carpets, a market badly damaged by synthetic flooring. China and the Central Asian republics produce large tonnages across a range of grades, and Britain, South Africa, Uruguay and Argentina supply distinctive types.

World output changed -16% over the ten years to 2024. The long trend is downward: wool has lost share to synthetics and to cotton for decades, and sheep flocks in most producing countries are now kept as much for meat as for fiber.

Australia was the largest exporter of greasy and scoured wool (HS 5101) in 2024 with 62% of world export value, ahead of New Zealand (10%), on world trade of $2.8 billion (CEPII BACI). China was the largest importer with 71%.

Wool has one of the most lopsided trade patterns of any commodity on this site. Australia sells raw greasy wool; China buys the majority of it to scour, comb, spin and weave. That single relationship dominates the market, and it means the world wool price is effectively set by the buying appetite of Chinese topmakers and by their access to finance, rather than by retail demand in the countries where the garments are eventually sold.

Italy remains important as a buyer of the finest grades for luxury weaving, and India, the Czech Republic and Turkey take significant volumes. But the concentration of early-stage processing in one country is the structural feature of this trade, and it makes Australian growers unusually exposed to Chinese credit conditions and trade policy.

The series shown is Wool, fine 19 micron, Australian Wool Exchange spot, which was 1,601¢/kg in July 2026, up 63% from a year earlier (IMF PCPS). The coarse counterpart, Wool, coarse 23 micron, Australian Wool Exchange spot, was 1,484¢/kg in July 2026. Note the unit is US cents per kilogram, and these are clean-basis quotes for specific micron categories at Australian auction. The fine series nominal high was 1,865¢/kg in June 2011.

Two conventions matter. First, wool is sold greasy but priced clean. A greasy fleece contains lanolin, suint, dust and vegetable matter, and the yield after scouring is typically sixty to seventy-five percent. A clean-basis price must therefore be multiplied by the yield to get what a grower actually receives per kilogram of greasy wool, and yield varies by region and season.

Second, micron is everything. Prices are quoted separately for each micron category, and the premium for finer wool widens and narrows with fashion and with the supply of fine fleece. The Australian Wool Exchange publishes an Eastern Market Indicator as a broad average alongside the micron-specific quotes, and most Australian wool is sold by open-cry auction after being objectively tested for micron, yield, strength and vegetable matter.

There is no futures market of consequence. Growers manage price risk through forward contracts with exporters and through the timing of sales, and a large clip can be withheld from auction if reserve prices are not met.

China scours, combs and spins the large majority of world apparel wool, so Chinese topmaker buying determines the price. Their access to credit, their order books from garment makers and Chinese trade policy therefore matter more to an Australian grower than retail demand in Europe or America.

Polyester and acrylic are cheaper, machine-washable and available in unlimited quantity, and they have taken the bulk apparel and carpet markets from wool over decades. Wool now competes on properties, warmth, odour resistance, moisture handling, rather than on price, which caps how much it can sell.

Because prices are quoted by micron, a shift in the supply of fine fleece, driven by breeding decisions and by seasonal conditions that affect fiber diameter, changes the average price without any change in tonnage. Drought produces finer but weaker wool, which cuts both ways.

Most sheep now earn more from meat than from fiber, so flock decisions follow lamb prices rather than wool prices. When lamb is profitable, growers shift toward meat breeds and shorter wool, reducing the fine wool clip regardless of what wool is worth.

Australian rangeland flocks depend on rainfall. Drought reduces both the number of sheep and the weight and strength of each fleece, and the recovery takes years because ewes must be retained rather than sold. Australian seasonal conditions therefore drive world fine wool supply.

Fine merino's largest end market is knitwear and tailoring, which are fashion-sensitive and concentrated in a few luxury and premium brands. A shift toward casual clothing or away from tailoring reduces demand for the finest grades disproportionately.

Shearing is skilled, physically demanding seasonal work, and shortages of shearers have delayed clips and raised costs in Australia and New Zealand. Because a sheep must be shorn whether or not the wool is profitable, labor cost is a floor under production cost that does not fall with the price.

Sheep are shorn once a year, usually with mechanical handpieces, and the fleece is removed in one piece. On the shed floor it is skirted, removing the stained and short edges, and classed into lines by micron, length, strength and vegetable matter content. Classing is a skilled job that materially affects the price achieved, because buyers pay for consistency within a bale.

Bales are objectively tested by an independent authority for mean fiber diameter, yield, staple length and strength before sale, which is why Australian wool can be bought at auction on measurement rather than on inspection. Most is sold at open-cry auction in Sydney, Melbourne and Fremantle.

Scouring is the first processing step: greasy wool is washed in a series of hot detergent bowls to remove lanolin, suint and dirt, and the lanolin is recovered and refined for cosmetics and pharmaceuticals. Scoured wool is then carded to disentangle the fibers and, for worsted processing, combed into a continuous sliver called top, which removes short fibers and aligns the rest.

Top is drawn and spun into worsted yarn for suiting and fine knitwear, or, for woollen processing, carded wool is spun directly into a bulkier, hairier yarn for tweeds, blankets and carpets. Dyeing can happen at fiber, top, yarn or fabric stage. Fabric is then woven or knitted, and finishing treatments give machine-washability by removing or coating the scales that cause felting.

All production figures on this page are greasy weight. Multiply by yield, typically sixty to seventy-five percent, to get clean fiber.

Apparel takes most fine wool: knitwear, suiting, base layers and increasingly performance and outdoor clothing, where merino's ability to manage moisture and resist odour has opened a market that did not exist thirty years ago. That technical positioning has been the industry's most successful marketing shift in decades.

Interior textiles take most coarse wool: carpets, rugs, upholstery, blankets and felt. This market has shrunk substantially as synthetic carpet took over, and it is the reason strong crossbred wool prices have been depressed for years, in some seasons below the cost of shearing.

Industrial and technical uses are small but persistent: insulation, where wool's moisture buffering and fire resistance are useful; acoustic panels; oil spill absorbents; and felts for machinery. Wool's natural flame resistance makes it valuable in aircraft and transport upholstery.

Lanolin recovered during scouring is a genuine co-product, refined into ointments, cosmetics and pharmaceutical bases. Coarse and waste wool is also used as a soil amendment and slow-release fertilizer, a small market that has grown with interest in circular materials.

The chain is unusually long and unusually concentrated at one point. Wool goes from grower to classer to auction to exporter to scourer to topmaker to spinner to weaver to garment maker, and it can cross several borders on the way. The concentration is at the early processing stages: scouring and combing capacity sits overwhelmingly in China, with smaller amounts in Europe, and once wool leaves Australia in greasy form the value added happens elsewhere.

That concentration is the industry's main vulnerability. Australian growers depend on a small number of exporters selling into a single dominant processing destination, and trade friction, credit conditions or a change in Chinese industrial policy transmits directly to auction prices. Attempts to rebuild early-stage processing in Australia have repeatedly foundered on scale and cost.

Physically the trade is straightforward: pressed bales in containers, with no perishability and no phytosanitary problem beyond standard treatment. Storage is cheap and wool keeps indefinitely, which means both growers and buyers can hold stock, and large stockpiles have periodically hung over the market.

The historical lesson the industry still refers to is the reserve price scheme, under which a floor price was defended by buying wool into a stockpile until the accumulated holding became unsellable and the scheme collapsed. It took more than a decade to clear, depressed prices throughout and remains the standard example of what happens when a producer body tries to set a price rather than discover one.