The price of Australian merino wool

Wool is one of the most appreciated textile fibers and is considered one of the most environmentally sustainable not only because it is a natural fiber but also because it is 100% recyclable. The world's leading exporter of wool is Australia, which exports 90% of the wool produced to four countries (China, India, Italy, and South Korea)^[1]. This makes the quotations of Australian wool a benchmark for prices in different areas.
Among the wool products listed in PricePedia, the following, referring to the prices of European imports from Australia, can be noted:

• Greasy shorn wool, referring to shorn wools that have not undergone any cleaning process;
• Shorn wool, degreased but not carbonized shorn wools.

The following graph shows the comparison between the two prices, expressed in euros per ton.

The prices of the two wool products are characterized by a similar dynamic, although the price of greasy shorn wool has higher levels and volatility compared to the quotations of shorn wool.
Furthermore, the fact that the quotations of the greasy product are higher than those of the "clean" product may seem counterintuitive. However, this differential is justified by the higher quality of the greasy shorn wool, as it comes from merino sheep. Wool produced from merino sheep, the main breed raised in Australia, is indeed highly prized because it has a smaller diameter than common wool and is exported in the form of greasy product. This is further confirmed by the fact that over 95% of wool exported from Australia is greasy wool.
Further confirmation of the quality of the wools included in the greasy product code comes from the comparison between the EU customs price and the price of Australian wool (AWEX). The latter is, in fact, a weighted average of the prices of wool marketed at the main Australian exchange venues on the Eastern coast, based on characteristics such as type, micron, fiber length, strength, etc., and refers to clean wool. Given the prevalent presence of merino wool in Australia, it can be considered representative of the price of clean merino wool.

The indicator of Australian wool AWEX has a higher price level compared to the EU customs quotations of greasy Australian wool. One of the factors influencing this differential is certainly the washing and cleaning process.
The two quotations also show a very similar dynamic. Both have an absolute peak in the second half of 2018. Since then, prices have been affected by a decreasing trend, bringing quotations to levels similar to those of the first half of 2013.