Wool's benchmark Eastern Market Indicator (EMI) is tipped to rise over the next five years, reaching an average of 1903 cents a kilogram clean by 2026-27.
And for the end of the 2021-22 fiscal year, the national commodity forecaster ABARES, is predicting an average of 1390c/kg - a 16 per cent lift compared to 2020-21.
In 2022-23, wool prices are expected to lift 19pc to 1663c/kg, driven partly by a continued demand for fine and superfine wool.
On the back of strong economic growth in key wool markets, the wool market has made a recovery since the dip in prices during the initial wave of the COVID-19 pandemic, in which the EMI fell to 930c/kg in October 2021.
Since October 2021, 17-micron wool has increased by 47pc to January 2022, yet 28-micron wool has slipped by 33pc.
According to ABARES, the strong growth in fine wool prices reflects the surge in demand for apparel-grade wool.
Strong economic growth in advanced economies is also expected to lift prices and global demand for wool is expected to increase by 2.5pc in 2021-22.
But in 2022-23 wool consumption is expected to soften with a tapering in decline over subsequent years to 2026.27.
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Australian shorn wool production is forecast to increase by 9.4pc to 320,000 tonnes by the end of 2022 on the back of wet conditions and a growing sheep flock as the national rebuild continues.
Despite a predicted decrease in average rainfall conditions, production is tipped to advance to 332,000 tonnes in 2022-23 with the Australian flock size predicted to increase a further 2.1pc to 71.9 million head in the same year.
However, global wool production is expected to continue its long-term decline. with substitution towards other natural and synthetic fibres to prevent dramatic increases in wool prices.
In 2021-2022, global wool production is only forecast to increase by 2pc to just over 1 million tonnes.
In Australia, wool cut per head is also forecast to drop 3pc to 4.4kg per sheep by the end of 2023.
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