FORWARD wool trading levels were mostly steady heading into the new week, with fresh bids providing a firmer base across key Merino microns.

Buyers remain active through early 2026, while grower participation remains limited.

Despite the softer close in the auction market, forward levels remain firm, supported by ongoing demand and limited supply. The forward curve is relatively flat, reflecting balance between near-term caution and optimism for early 2026. Most activity remains concentrated in fine Merino categories, while interest in crossbreds is steady at lower levels.

Auction market eases

The Australian wool market eased again this week, with the Eastern Market Indicator falling 16 cents to close at 1427c/kg, a drop of 1.1 percent.

Fine Merino types were the main drivers of the decline, with 16.5 to 18.5 micron categories down between 25 and 60c, while 19 micron slipped by around 10c. Broader Merinos were softer by 10 to 25c, crossbreds eased 5 to 20c, and cardings fell by a modest 3c.

Clearance rates declined to 85.5pc as growers held back wool in response to reduced buying activity. Buyer sentiment was steady but cautious, with exporters continuing to focus on better-style, high-strength fleece. Offshore demand from China was mixed, while Indian and European orders for specialty microns remained stable.

Macro and currency

The Australian dollar is trading around US65 cents, little changed over the week.

It remains supported by strong commodity prices, particularly iron ore and coal, but capped by the strength of the US dollar.

Global equity markets were mixed, and Australian ten-year bond yields are holding near 4.2pc. Markets continue to anticipate the first global interest rate cuts in early 2026, which is providing a modest tailwind to risk assets and export commodities.

Economic backdrop

Mecardo’s latest analysis highlights that easing global inflation and lower energy costs are beginning to improve the medium-term outlook for wool.

Supply remains tight following several years of flock contraction, while early signs of recovery in Chinese and European textile manufacturing are providing renewed optimism heading into 2026. (Mecardo, October 2025)

Outlook

The recent market correction appears more like a short pause rather than a reversal.

Export and forward demand remain resilient, and fine Merino contracts continue to trade well above their long-term averages.

With about 38,700 bales rostered for next week, the market is expected to remain steady into the end of October as participants await clearer signals from offshore markets and potential currency shifts.

Source – Southern Aurora Markets.