Domestic price of wool in New Zealand - Data and Analysis (2001-2034)

IBISWorld expects that the domestic price of wool will push up 1.6% during 2026-27 to 361.6 c/kg. Production volumes for exports are expected to wane further amid tight sheep production. According to the Ministry for Primary Industries (MPI), an ongoing shift from merino sheep to meat/mixed breed in Australia and fewer sheep in New Zealand is contributing to this trend. The elevated price of wool has offset the lower export volumes as a tighter wool supply supports price growth. The last year alone saw a 22% increase in wool export prices, according to the MPI.Between 2023-24 and 2026-27, the average wool export price has surged 27.5%, while export volumes have shrunk 18.7%, highlighting the recent trend. Steady demand from major export markets like China and India are continuing to support price growth. As a result, the MPI has noted a 4.0% export revenue increase for 2025-26.The domestic price of wool is volatile and is influenced by global factors. For example, a large proportion of globally produced wool is sold to Asian textile manufacturing countries like China. New Zealand benefits from strong export demand for wool, as it is one of the world's largest wool producers. Prices are also influenced by the strength of the New Zealand dollar. A depreciating dollar has helped boost export competitiveness while placing upward pressure on local wool prices.Developments in the Meat Processing industry also affect the domestic price of wool. As sheep farmers choose to either maintain their animals for wool production or to sell them for slaughter, wool production is strongly linked with sheep meat production. If the domestic price of sheep meat rises, it encourages sheep farmers to sell their animals to meat processors rather than keep them for wool production. This trend has been stark, with farm revenue shifting from being 10% derived from wool in the early 2010s, to now only around 4%, being replaced by lamb and cattle meat.The local supply of wool has also been lower in recent years due to drought-stricken flocks, keeping prices high. A slow rebuild will steady prices in the current year. The Iran-Israel-US war has yet to affect agricultural trade, but is expected to impact operations throughout the second half of calendar year 2026. With key agricultural inputs like urea significantly more expensive, this is likely to support higher wool prices in 2026-27. Overall, IBISWorld forecasts the domestic price of wool to lift at a compound annual rate of 7.9% over the five years through 2026-27.