Wool Heats Up as World Dresses Up. AUSTRALIA'S GOLDEN FLEECE

IF you've been eyeing an Italian wool suit or skirt, it might be a good idea to buy sooner rather than later. The price of fine fleece is on the rise. After inspecting samples from thousands of desk-sized bales stacked in a 53-acre warehouse near Sydney, international wool buyers converge on a small auction room.

``1,500 is it?'' spits out the auctioneer, selling six 400 lb. bales from a farm in Mudgee.

The opening price has scarcely left his lips before buyers shove the price up in machine-gun bidding: ``10!'' comes a shout. ``20!'' says another. ``30! 40! 50!-5! 60!-5! 70!-5! ... 1,575 [Australian] cents, is it?'' cries the auctioneer. And with the slam of a wooden hammer: ``1,575 - it's tied up.''

In less than 30 seconds, this lot's sold and another's on the block.

Australia is the world's biggest supplier of high-grade clothing wool. And bidders in auction rooms like this around the country set the prices that ultimately get passed along to consumers worldwide.

In the last 18 months or so, Australian raw wool prices have more than doubled from about 40 cents to 90 cents a kilogram (US; Australian 46 to 104 cents). Benchmark prices are off slightly from the record highs hit last April. But they're moving up on seasonal demand that could pump prices to record levels again. Although some wool brokers say a top is imminent, others predict equally high or higher prices for another two years.

Even if prices remain stable, the Australian dollar has strengthened significantly against foreign currencies, and that alone makes wool clothing dearer abroad.

In the next year or two, ``buyers from France and Italy and the United States will be paying 31 percent more for the same type of wool as they were at this time this year,'' says Bill Tysoe, wool valuer at Dalgety Winchcombe, a major Australia wool company. ``And the Japanese [the biggest buyers of Australian wool] will be paying about 18 percent more.''

But unprecedented demand for Australia's oldest commodity is the fundamental reason for higher prices.

The surge in demand is fueled by two factors. First, natural fibers are big among fashion designers worldwide. They've discovered wool isn't just for bulky overcoats but can be used in soft, elegant dresses, too.

``There's extraordinary demand for wool clothing now, and people are prepared to pay big money,'' says Dick Newman, director of the Australian Council of Wool Exporters. ``I recently asked an Italian suitmaker how many $1,500 suits he could sell in a year. He said, `$1,500? They cost $2,000 now!' And there are times when he can't get enough fine wool to make his suits.''

The other source of demand is China. In the last five years, China has leapfrogged to become the second biggest buyer of Australian wool.

``Some years ago, China was unheard of as a world user of wool,'' Mr. Tysoe says. ``Now they're buying enormous amounts of our wool. And they're on an expansion program which we see going on for the next 10 years.''

China's own wool is coarser than Australia's - more suited to knitted clothes than fine apparel. That sufficed until the post-Cultural Revolution period. Now, demand for better wool clothing is growing as personal incomes climb sharply and the drab garb of the Cultural Revolution is discarded.

Australia's sheep farmers are more than happy to supply fleece to the fashion conscious. After 10 lean years of low prices and growing debt, they're finally flush again. Wool brought in a record $5 billion (US; Australian $5.8 billion) in the 1987-88 fiscal year, surpassing coal as Australia's biggest export earner. If current price trends hold, a new record will be set this year. That's welcome news for Prime Minister Bob Hawke's government, which is trying to reduce the country's balance of payments deficit.

In expectation of higher prices, farmers such as Pat Maloney are investing in more sheep. One Australian woolly ram recently sold for a record $285,000.

How is 1988-89 shaping up? Mr. Maloney takes his eyes off the bidding long enough to offer a farmer's laconic reply: ``Hopin' for the best, mate.''