RECORD low wool supplies worldwide have given Australia's farmers the best chance to ride on the sheep's back again after decades in the doldrums.
New research shows that Chinese manufacturers took 73 per cent of Australia's wool last financial year as prices strengthened.
Rabobank analyst Airlie Hoskins said the issue for Australian farmers was to rebuild their flocks and reap the benefits of record prices after years of drought and poor demand saw them run down sheep numbers in favour of cropping.
Global and Australian production is just over half of the levels in 1989-90.
But wool is now more price competitive with cotton and polyester.
The Chinese have also emerged as major players in fashion and textile markets, taking $2.2 billion of wool last financial year, as demand from the eurozone drooped due to their economic woes.
Last winter wool prices shot up to $14.36 per kilogram on the Australian Wool Exchange , 60 per cent up on the year before and well above the 2005-10 average of $8.32c per kilo.
It is sitting around $12 per kilo this year.
Australia exported 345,000 tonnes last year - more than was shorn by running down its stockpiles - but that is unlikely to be repeated in 2011-12.
But Ms Hoskins is forecasting a bright future as favourable weather will give farmers the opportunity to build sheep numbers beyond the 77 million head this season, a near historic low, to capitalise on the higher prices.