The Australian wool market recorded a broad-based decline this week, snapping a recent run of gains, as softer buyer sentiment and margin pressures weighed on prices across all three selling centres: Melbourne, Sydney and Fremantle.

According to Australian Wool Innovation (AWI) commentary for week 38 (March 2026), the Eastern Market Indicator (EMI) fell by 32 Australian cents/kg, while the Western Market Indicator (WMI) dropped more sharply by 69 cents, signalling comparatively weaker conditions in Fremantle.

Australia’s wool market declined this week, ending a recent rally as weaker buyer sentiment and margin pressures weighed on prices.
The EMI fell 32 cents and WMI dropped 69 cents, led by losses in Merino wools.
Softer demand, higher supply, and a stronger Australian dollar pressured the market, though selective buying for quality lots persisted.

“Losses were led by medium Merino wools, which fell 70–75 cents in the eastern centres and 85–90 cents in the west. Finer Merino types also declined by 45–60 cents across all regions. Crossbred wool prices eased by 25–30 cents. In the carding segment, eastern markets remained steady to 5 cents higher, while Fremantle saw a sharper fall of around 45 cents,” the AWI Limited said in its Commentary.

The uniform decline across Merino fleece categories points to a broader pullback in buyer demand rather than isolated weakness. This follows several weeks of strong gains after the Chinese New Year period, with much of the earlier purchases still moving through processing and manufacturing stages.

Market sentiment this week reflected growing caution among exporters and processors facing tighter margins due to rising input costs. Increased wool offerings further reduced buyer urgency, while a firmer Australian dollar added pressure on export competitiveness, the AWI commentary noted.

Despite the overall softer trend, demand remained relatively firm for well-prepared, lower-risk lots, indicating that buyers are becoming more selective rather than exiting the market entirely.

Industry observers view the current downturn as a phase of consolidation, with the market testing resistance levels after recent gains, rather than signalling a fundamental shift in demand.

Looking ahead, all three auction centres will operate on a Tuesday-Wednesday schedule next week, with 40,909 bales expected to be offered.

Market direction will depend on the trade’s ability to absorb current supply levels and navigate prevailing cost pressures.

Fibre2Fashion News Desk (CG)

ICE cotton futures paused rally on yesterday after hitting 8-month high in the previous session. Stronger US dollar and profit booking led to ease in US cotton prices. Rising US dollar made US cotton more expensive for overseas buyers. However, stronger crude oil capped losses as it caused for higher cost of production of polyester, a manmade substitute of cotton.

The most traded May 2026 contract settled at 68.70 cents per pound, down 0.07 cent. May contract has maintained a gain of 353 points despite slight fall. The contract had witnessed rally during the last five trading sessions.

ICE cotton futures paused after hitting an 8-month high, pressured by a stronger US dollar and profit booking.
The May 2026 contract settled at 68.70 cents per pound.
Rising crude oil capped losses by supporting cotton over polyester.
Lower volumes but higher open interest signalled fresh positions, while markets await the USDA report for direction.

Middle East tensions increased risks to energy supply, pushing Brent crude prices higher. Higher crude oil prices raised polyester production costs, making cotton relatively more competitive and providing indirect price support.

Market pressure was mainly due to a stronger US dollar, which recovered after the Federal Reserve kept interest rates unchanged, reversing prior weakness. The stronger dollar made US cotton more expensive for overseas buyers, weighing on demand sentiment.

Trading volume stood at 86,811 contracts, lowest in last 3 sessions, indicating lighter market participation. Open interest increased by 2,046 to 341,326 contracts, suggesting fresh positions and continued market involvement. Certified stocks unchanged at 116,789 bales as per ICE data on March 17, indicating no immediate supply pressure

Cotton rallied strongly over the past several sessions, driven largely by speculative short covering, pushing prices to multi-month highs. Current dip reflects mild profit booking and signs that short covering may be slowing or nearing completion.

Market analysts stated that the recent rally triggered significant short covering, but the future direction will depend on how speculative positions evolve next week. Mills were previously complacent with low inventories, but sudden price rise forced them to re-enter the market and cover demand.

Market participants are awaiting the next USDA export sales report for fresh direction.

This morning (Indian Standard Time), ICE cotton for May 2026 was traded at 68.13 cents per pound (down 0.57 cent), cash cotton at 67.95 cents (unchanged), the July 2026 contract at 69.95 cents (down 0.62 cent), the October 2026 contract at 71.99 cents (down 0.13 cent), the December 2026 at 72.12 cents (down 0.52 cent) and the March 2027 contract at 72.99 cents (down 0.48 cent)). A few contracts remained at their previous closing levels, with no trading recorded so far today.

Fibre2Fashion News Desk (KUL)

Germany’s economic outlook deteriorated sharply in March 2026, as investor confidence weakened amid escalating geopolitical tensions in the Middle East, according to the latest ZEW Indicator of Economic Sentiment. The ZEW expectations index plunged to -0.5 points, marking a steep decline of 58.8 points from February, reversing earlier optimism at the start of the year.

The sharp fall reflects growing concerns over rising energy prices and inflationary pressures linked to the ongoing conflict, ZEW said in a press release.

“The ZEW Indicator has collapsed,” said Achim Wambach, president of ZEW, noting that the escalation in the Middle East is fuelling energy costs and increasing risks to Germany’s fragile economic recovery. He added that financial market experts remain sceptical about a swift resolution to the conflict, raising uncertainty over the economic outlook.

Germany’s economic sentiment plunged in March 2026, with the ZEW index falling 58.8 points to -0.5 amid Middle East tensions driving energy and inflation concerns.
While the current situation improved slightly to -62.9, it remained weak.
Around 80 per cent expect rising inflation.
Eurozone sentiment also declined sharply, with expectations at -8.5 and conditions worsening to -29.9.

In contrast, the assessment of Germany’s current economic situation showed a modest improvement. The corresponding indicator rose by 3 points to -62.9, although it remains firmly in negative territory, signalling continued weakness in overall economic conditions.

Inflation concerns have intensified, with around 80 per cent of respondents anticipating increased price pressures in both Germany and the broader eurozone.

The negative sentiment extended across the eurozone, where the expectations index fell by 47.9 points to -8.5, slipping into negative territory. Meanwhile, the assessment of the current economic situation in the eurozone declined further to -29.9 points, down by 16.3 points from February.

Fibre2Fashion News Desk (SG)