This positive development, on the back of on-going decline of the Australian sheep flock, has prompted the Australian Bureau of Agricultural and Resource Economics (ABARE) to predict the Australian Eastern Market Indicator (EMI) price for wool will average 920 cents a kilogram (clean) in 2010-11 - a six per cent lift relative to 2009-10.

Figures released by ABARE show retail textile sales in Australia’s dominant wool export market, China, grew by 19pc in 2009 to take up more than 70pc of Australian wool exports, and as Chinese consumers’ incomes increase wool demand is tipped to rise exponentially.

There are signs of economic recovery in global economies, particularly India, but consumer confidence in the European Union and United States remain weak, where any recovery in wool consumption is assumed to be gradual, it added.

“Assuming the prices of man-made fibres such as polyester move roughly in line with oil price, wool prices are projected to increase in competitiveness in the next few years, as oil prices are forecast to rise more significantly,” ABARE reported.