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Wool industry grapples with soaring prices

The wool market is measured via the Eastern Market Indicator, which also closed at a record 2027 cents a kilogram at the end of May.

It's unchartered territory for wool growers and brokers, who have watched the price of the fleece break record after record over the past two years.

This season, supply is tight as farmers struggle with on-going dry conditions across northern and western New South Wales, a key production region for wool.

The buyers — mills in China and Italy that process the raw wool into everything from the superfine fabric required for high-end suits, to the coarser wool used in military uniforms — have been mostly happy to pay the higher prices, but now they are increasingly feeling the pressure.

While a weaker Australian dollar has cushioned the rise to an extent, the US dollar price is still on an upward trend.

"It's a concern, for us and for our partners along the supply chain," Diyang Merino Textile director George Chen said.  Mr Shen's company, founded in east China in 2008, is a vertically integrated wool production house. It does everything from knitting, dying and finishing fabric, through to actually making garments for clients.

"The key issue question for us is, can the final consumer accept an increase of the final garment price," Mr Chen said.  

(See the full story at ABC Rural