The price of wool is determined in the spring
"Wool is very important. If we can sell it well, we'll make good money."
Tsetsgee is a camel herder near Delgerkhangai Sum. What she describes in this single sentence is a market that springs up anew every spring, with no exchange and no official prices.
In the spring and early summer, when the animals are sheared, a web of rumors, estimates, and negotiations begins to take shape. How was the winter in other parts of Mongolia? How many nomads are bringing wool to market? How urgently do the processing plants need new supplies? No one knows all the answers, but through the grapevine, a comprehensive picture emerges from which a price is determined.
The price of cashmere wool serves as the benchmark for the entire wool market: as the most significant wool price, with many players involved, it sets the tone that also guides prices for camel and yak wool. Consequently, the camel herder’s income depends directly on how well the cashmere goats have survived the winter.
Traveling merchants are now making the rounds among the nomads and quoting purchase prices. The herders then face a classic dilemma: sell now, or wait — hoping the price will rise a bit more, but risking that they’ll end up with less. Some drive to the nearest town to sell there. Others band together into collectives to strengthen their bargaining position.
At steppenstrolch, we are part of this system: By purchasing Mongolian wool and selling it in Europe, we are increasing demand. This drives up wool prices, which is good for the nomads, but at the same time presents us with a real challenge.
Our purchase prices are set around April each year and generally apply for the entire season. As a company that supports fair wages throughout the supply chain, rising wool prices are welcome news—but they also have a direct financial impact on us. At Steppenstrolch, material costs account for about 45% of our total expenses. That is exceptionally high in the textile industry. There is hardly any other clothing company where the price of raw materials has such a direct impact on the retail price.
In this article, we’d like to show you how prices are changing and what factors are influencing them.
Fewer animals, less wool, higher prices
According to the National Statistical Office of Mongolia (NSO), there were still around 27.6 million goats in the country in 2022. By 2024, that number had dropped to just 22.9 million—a decline of nearly 17% over two years. The situation is similar for sheep: from 32.7 million (2022) to 24.5 million (2024), a decrease of over 25%.
One major reason for this is the dzud. This is the name Mongolians give to a natural phenomenon that can occur in various forms. The most devastating scenario is the combination of two poor seasons: a dry summer causes the pastures to wither, and the animals enter winter with insufficient fat reserves. If unusually heavy snowfall then adds to the problem, the pastures become buried under a thick layer of ice and snow. The animals can no longer reach the grass beneath and starve to death. In the winter of 2023/24 alone, over 8 million animals died. Mongolia has experienced six severe dzud events in the last ten years.
This is no coincidence. Mongolia is warming at nearly three times the global average rate. Drier summers, harsher winters, and less and less time for the land to recover between disasters. Added to this is a structural problem: overgrazing. Too many animals on too little land have degraded the steppe in some regions so severely that the grass barely grows back—a vicious cycle of climate stress and human pressure on the ecosystem.
But the dzud alone does not fully explain the crisis. There are structural factors at play that have been weighing on Mongolia for decades. With the collapse of the Soviet Union and the transition to a market economy, many of the institutions that had previously supported pastoralism disappeared: state veterinarians, well keepers, and cooperative structures. At the same time, anyone could now become an honorable herder, largely without regulation. The result: livestock numbers exploded, pastures became overgrazed, and the traditional mechanisms for allocating grazing land broke down.
Added to this is demographic change. More and more young Mongolians are choosing to live in the city—understandable, but with far-reaching consequences. Traditional knowledge about pasture management, animal health, and weather observation is being lost. Those who are still herders today are often older and work with less support.
Many herders have recognized overgrazing as a problem and are deliberately reducing their herds—not out of economic necessity, but to preserve the pastures for the long term. There are young herding families who want to do things differently and better. Local agreements are emerging among herding families: Who grazes where and when? How many animals can an area sustain? What will be left for next winter? They are joining forces, forming collectives, and working together to find a solution that works for everyone and is sustainable in the long term.
Weniger Tiere, weniger Wolle — und ein Weltmarkt, der trotzdem wächst. Die globale Nachfrage nach hochwertigen Naturfasern steigt, während das Angebot aus der mongolischen Steppe schrumpft. Das treibt die Rohstoffpreise nach oben — und landet am Ende auf unseren Einkaufsrechnungen.
A Country Under Cost Pressure: Wages, Inflation, and Exchange Rate Dependencies
What happens in the pastures is only part of the story. At the processing facilities where our wool is spun, washed, and further processed, there’s a second cost—and that’s on the rise, too.
Overall inflation in Mongolia has totaled approximately 57% over the past five years. That is not a typo. By comparison, inflation in Germany stood at around 20% during the same period. What this means for Mongolian businesses can be illustrated by one example: the minimum wage. In 2023, it was 550,000 MNT per month. In 2024, it rose to 660,000 MNT (+20%), and in 2025 to 792,000 MNT (another +20%). That’s a 44% wage increase in two years, necessary to counter inflation, but a significant burden for manufacturing companies.
Added to this is a factor that is rarely discussed: machinery, spare parts, and consulting services for the Mongolian textile industry are predominantly purchased from abroad—and are often invoiced in U.S. dollars. This means that while wages in MNT are rising and general inflation is driving up local operating costs, investments and technical maintenance must be paid for at dollar exchange rates. The Mongolian tugrik has lost significant value against the dollar in recent years—which further increases investment costs for Mongolian companies.
Our suppliers are therefore facing pressure from three sides at once: rising labor costs in MNT, general price inflation, and dollar-denominated capital costs. This is directly reflected in the prices we pay for the products.
On the European side, there has also been a shift, less dramatic, but still significant. Over the past five years, the euro has appreciated by about 21% against the Mongolian tugrik: as of today, one euro costs around 4,185 MNT, compared to about 3,450 MNT in 2021. This offsets part of the cost increases—but only part of them.
The structural price increases on the Mongolian side are more pronounced and widespread than the exchange rate can offset. Furthermore, there remains considerable uncertainty in planning: it is virtually impossible to predict from one year to the next what the actual purchase price will be.
What this means for steppenstrolch
We source our products directly from family-run businesses in Mongolia. This is important to us because it is the only way we can ensure transparency and fair trading conditions. However, it also means that we are directly affected by market fluctuations. We do not have wholesale contracts that lock in prices for years.
As a company that is not primarily profit-driven, we honestly convey this reality: rising prices reflect a raw material that is becoming increasingly valuable because of climate change and because the people who produce it deserve fair compensation.
So the next time you buy 100 grams of knitting yarn, a yak wool scarf, or a camel wool sweater from us, you’ll be holding something in your hands whose price tells an honest story.
300 Euros for a wool sweater