Wool exports 2022/23

Wool commodity overview

• The value of Australian wool exports fell $73.8 million (-2.3 per cent) in 2022/23 to a total of $3.2 billion.
• Export value was driven lower as weaker demand led to lower prices which more than offset an increase in export volume.
• Wool exports are set to decline in value again in 2023/24 due to lower prices and a minor production decline.

Trade performance in 2022/23

Increased wool production was offset by lower prices which drove a small decrease in the value of Australian wool exports in 2022/23. The value of wool exports fell $74 million (-2.3 per cent) in 2022/23. This meant that export value held on to most of the strong gains achieved in 2021/22 which saw a rise of $835 million (+34.3 per cent). A total export value of $3.2 billion in 2022/23 was on par with the five-year average.

The volume of wool exports rose by 2.4 per cent in 2022/23 to just over 330,000 tonnes, the highest volume since 2017/18. The growth in export volume corresponds to a 3.8 per cent rise in Australian wool test volumes during 2022/23. This was the third consecutive year of growth in export volume, a period in which volume has grown by 35 per cent. Export volume growth has been driven by increased production which is largely the result of a 23 per cent rise in the national sheep flock across the past three years. Wet conditions in those years also promoted increased average wool cuts to further boost production.  

Despite the rise in export volume, export value was pushed lower by a 7.3 per cent decline in the average export price of Australian wool in 2022/23. This trend reflects the changes seen in the Eastern Market Indicator (EMI) averaging 6.5 per cent lower year-on-year in 2022/23. Generally, there was reduced demand for Australian wool, particularly in the second half of 2022 as Chinese manufacturing and retail demand was impacted by COVID lockdowns and restrictions. The softening of those restrictions led to some price stability in early 2023. However, the downward trend for prices resumed in February as challenging economic conditions for consumers affected retail demand for wool.

Fine wool less than 20 micron saw the largest decline in export value in 2022/23, falling by six per cent to $1.7 billion. Despite this, export value was still eight per cent above the five-year average. The decline was driven by a 4.5 per cent fall in export volume and a 1.5 per cent fall in average export price. Conversely, broader wool recorded an increase in export volume, with a 15 per cent rise in export volume for wools 24 micron and above. These broader wools also saw larger declines in average export price of around 10 per cent. Meanwhile, wool between 20-23 micron saw a moderate rise in export volume of 4.3 per cent which was counter-balanced by a fall in average export price of 5.8 per cent. Overall, the value of 20-23 micron wool exports saw a minor decline of 1.7 per cent to just over $1 billion.

Major export markets

China remained the largest market for Australian wool, accounting for 79 per cent of total export value in 2022/23. The value of exports to China fell $57 million (-2.2 per cent) to $2.5 billion. This followed two years of growth in export value and brought value back to 1.7 per cent above the five-year average. Interestingly, fine wool was the only category to see a decline in export value to China in 2022/23. Wool exports finer than 20 micron declined  $182 million (-11.1 per cent) in value. Meanwhile wool between 20-23 micron saw a rise of $47 million (+5.8 per cent).

Wool exports to Italy fell $8 million (-3.5 per cent) to $218.1 million in 2022/23. The Italian market accounted for 6.8 per cent of total export value. The fall was led by a decline in the value of 20-23 micron wool of $65 million (-55.8 per cent) following a short-lived spike in 2021/22. This was partially offset by a $51 million (+61.5 per cent) rise in the value of exports less than 20 micron which reached their highest value since 2011/12.

India was the only major market to see growth in export value in 2022/23. The value of wool exports to India rose $37.6 million (+23.3 per cent) to $199 million. This accounted for 6.2 per cent of total export value. Exports to India saw a noticeable increase following the Australia-India Economic Cooperation and Trade Agreement (A-I ECTA) coming into effect at the end of December 2022. This agreement saw the immediate removal of a 2.5 per cent tariff on Australian wool. Although this was a minor tariff, the value of exports between January to June 2023 was 16.3 per cent higher than the previous six months.

Outlook for 2023/24

Wool exports are expected to see another decline in value in 2023/24 due to lower prices and volumes. The average price of wool exports is forecast to be lower again in 2023/24. Economic conditions remain challenging for consumers which will keep spending on woollen products subdued. As a result, the EMI in initial auctions for 2023/24 was 11 per cent below the 2022/23 season average and is expected to soften further as the season progresses. Growth in wool production is expected to come to an end in 2023/24 with a 1.1 per cent decline in wool production forecast by the Australian Wool Production Forecasting Committee. The primary driver of the lower production forecast is the outlook of drier conditions expected to produce reduced average wool cuts. In addition, the number of sheep shorn is set to only see a small increase as the rebuild and expansion of the Australian sheep flock reaches maturity. Lower prices coupled with a minor decline in supply is expected to drive a decline in exports value of more than 10 per cent and back below $3 billion in 2023/24.

Source: Global Trade Atlas

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