Wool prices, which dropped almost 10 percent in the first quarter of 2014, suddenly stabilized and moved higher in April on the Australian Wool Exchange. Market participants went from bearish to bullish within a two-week period as domestic buyers showed interest in virtually all wool types and descriptions, and continued to be firm during the second month when overseas buyers showed up en masse. Prices in USD on the Eastern Market Index rose by an impressive 5.7% during the month.
Wool supply had been in somewhat shorter supply at the end of last season due to drought conditions in key regions of Australia which took a toll on wool production, driving up prices and forcing many apparel designers and manufacturers to switch from wool to other fibers.
Between mid-October and late March, wool prices dropped 14 percent in USD terms, making them much more attractive to buyers. Time will tell whether the strong demand will continue or whether it was an opportunistic one-off because of relatively low prices.