MercoPress. South Atlantic News Agency

Uruguay's wool sector is going through a boom

The sheep meat market is also holding strong

Despite a long-term decline in flock size, Uruguay's wool and sheep sector is going through a boom driven by record-high international prices. Wool prices have reached their highest level in at least three years in the South American country, mirroring a dramatic surge in the Australian market.

The Australian Eastern Market Indicator (IME) hit US$9.61, the highest since February 2023, driven by the largest weekly rise in six years (+7%) and an 18% increase last month. Corriedale and crossbred wool have risen by 45% since June, while Merino lots of 18 microns or less have increased by up to 25% this season.

The market is fueled by historically low global stock levels and increased demand, primarily from China, where the recent Nanjing Wool Fair saw the most fluid business environment since 2018.

Uruguay’s production is mulesing-free, which is a significant competitive advantage for meeting the strict RWS or “Non Mulesed” animal welfare certifications demanded by the European textile industry for tops and yarns produced in China.

Recent deals reported by the Uruguayan Wool Secretariat (SUL) show fine Merino wool (18.8 microns with RWS certification) fetching US$7 per kilo, up a dollar from the previous month.

The sector is experiencing a “bittersweet moment” as the price boom occurs against a backdrop of historical decline in the national sheep flock, which has fallen by 11.2% to a historic low of 4.75 million head, according to preliminary data.

This severe decline, despite a strong recovery in meat prices, suggests wool was the missing factor needed to stabilize the herd. The sector has struggled for decades against competition from cheap, petroleum-derived synthetic fibers and faces obstacles like the inability to export bone-in sheep meat to certain markets, like the European Union, due to the foot-and-mouth disease vaccination protocol.

Analysts project the upward price trend will continue, creating the outlook for the “most important wool harvest in decades.” This suggests wool may be returning to its rightful place as a key commodity essential for the proper maintenance of Uruguay’s natural countryside.

Meanwhile, the sheep meat market remains strong, with low supply and rising prices, showing an increase of about 10% in the value of sheep and lambs recently. Sheep slaughter for the year 2025 is 22% below 2024's figures, which contributed to the decline in the overall flock.

With weekly export volumes fluctuating after a recent sharp decline, the 30-day moving average price for sheep meat remains at a remarkable US$5,542 per ton, 41% higher than the previous year.