Australia Wool Industry: Wool price shows signs of going down

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02:33

Growing demand in China is helping to boost Australia's wool industry. Wool prices for growers are at a record high. But there are signs that the good times for the world's largest wool producer may soon come to an end. Greg Navarro explains.

On a rare rainy day in rural New South Wales. Edward Blomfield enlists some help to move things along. Thousands of sheep on this family farm are in the process of being sheared. Their prized commodity is carefully sorted - worth more at the moment than ever before.

EDWARD BLOMFIELD WOOL GROWER "It's definitely probably the best it's been since I've been doing the whole lot."

Australia's wool industry is experiencing record prices - nearly double what they were just 6 years ago.

FIONA SIMSON PRESIDENT, NATIONAL FARMERS FEDERATION "Wool here in Australia has just reached the $20 a kilo mark which is just phenomenal and it has seen enormous growth over the last year or two - that is due in part to the take up of wool by China - China loves our wool and as such the demand from China has really been boosting our Aussie wool prices."

Exports to China alone last year were worth almost $3 billion AUD. That's welcomed news for wool growers - presenting some people with a rare opportunity.

KATRINA BLOMFIELD WOOL GROWER "We can do all of the thing we need to do on a farm like put out our fertilizers, fix our fences, because a lot of that hasn't happened the last 10 or 15 years very much."

Those tough times are also partly responsible for the rise in prices. Lower prices meant growing wool wasn't sustainable for a number of farmers.

FIONA SIMSON PRESIDENT, NATIONAL FARMERS FEDERATION "People exited the industry some years ago when it looked like prices were on a downward spiral."

That exodus led to a shrinking supply.

EDWARD BLOMFIELD WOOL GROWER "Once all of the wool comes out of this region, especially the super fine, it's gong to be interesting to see how much is actually there - the buyers night actually get a shock as to the lack of it because there have been a lot of people in the last 6 years who have gotten out it and gotten out of merinos."

GREG NAVARRO WALCHA, NEW SOUTH WALES "Experts say the one thing that will have the greatest impact moving forward isn't the increasing demand or shrinking supply, but the drought."

All of New South Wales, which produces most of Australia's wool, is in the midst of drought - creating conditions not seen here for nearly half a century.

KATRINA BLOMFIELD WOOL GROWER "Everyone is suffering a terrible drought at the moment and all that wool prices are doing is paying for feed to keep the animals going. So I think a lot of people are yet to see a good profit where they can fix up infrastructure and buy new machinery and do those."

Many are waiting for the drought to break and hoping prices for their wool will continue to remain high. Greg Navarro, CGTN, Walcha.