ONE step forward, two steps back but still on its feet best describes the wool market in the past week.
The market in Australia defied early expectations to open on a relatively positive note in Melbourne on Tuesday with good support from a range of buyers.
Midway through the first day of selling things were looking decidedly upbeat. However, as attention turned to the west with a decidedly lacklustre Fremantle catalogue in terms of quality, buyers become even more selective, and the market noticeably sagged.
The current regime of single centres offering on alternate days in Sydney and Fremantle saw an east coast only sale on Wednesday with even less enthusiasm than had been evident in the west.
AWEX's Northern Market Indicator closed down 37c on 1193c. The 17 micron indicator closed on 1625c, 18 micron 1473c, 19 micron 1339c, 20 micron 1278c, 21 micron 1255c, and 28 micron 580c.
Perhaps the doubts surrounding the US vaccine trial validity crept into buyer sentiment, as had occurred on Wall Street, or perhaps there was some unease about Australia's agricultural exports in general.
In any case the market on Wednesday failed to reach any great heights, with the exception of the carding sector, which did manage to gain 20c or so.
As headlines changed throughout the week when world leaders made some outlandish statements the stock markets made further gains, but currency markets jumped about and the US dollar fell to a two-week low against the Euro, and the Aussie dollar found itself well above recent trading levels as well.
This meant that the drop in local currency terms was about 20c-40c, but it only registered a fall of single digits in USD terms while in Euro terms the market eased by 10c-20c.
Some, but certainly not all exporters, are reporting a bit of business being done later in the week. Given a national offering of only 20,000 bales coming up this week in Australia just one or two decent orders of Merino fleece will be enough to put a bit of backbone into the game.
Commentary from China in recent days around the wool industry has been cautiously optimistic with talk of some brands calculating how many units they will need for the forthcoming autumn/winter selling season, and others asking for updated prices and samples.
As bad as the retail sector may be today, or has been in the last couple of months, it will get better as the consumers re-emerge, and they cannot sell a T-shirt or a tank top in the winter collection - unless it is a high performance 'athleisure' wear made from pure Merino.
A whole new range of garments needs to be offered to the public in the new design and style and colour for the first post-covid collection.
Retailers who want to simply roll out stuff they had left over from last season will not excite their customer. Especially if they have blacks and greys when the new trend is at the other end of the colour spectrum.
A whole new range of garments needs to be offered to the public in the new design and style and colour for the first post-covid collection.
- Bruce McLeish, Elders
So, there is understandably a degree of caution and some difficult business transactions, but new samples and tentative orders are emerging as the calendar ticks over.
It is not that hard to convince designers about the merits of merino wool, given the education process that has been taking place in recent years, and the conversations with the purchasing managers is now not such a difficult one either given the current price point for Merino wool.
Consumer awareness is light years ahead of where it was 10 years ago so there is already a platform to build upon. However, there is still some way to go with a simple Google search of 'wool clothing' producing 397,000,000 results, but a cotton clothing search request eliciting about twice as many results.
But, there are so many consumers emerging from lock-down with a different perspective on life, family, health, global activities and their place in the future that Merino wool in particular can tap into and tick a lot of boxes very quickly and succinctly.
The more astute retailers already have their story boards in place on their websites and a simple visit to The Woolmark Company website allows inquiring minds to quickly and easily link through to a vast arrays of Merino wool stockists.
These companies are already telling the story of the natural fibre, the people behind the fibre and the environmental benefits that merino wool brings to a post covid world.
Plenty of attention is currently focussed on Beijing, where the Chinese People's Political Consultative Conference is being held with more than 2000 delegates from across the country.
Day by day legislation will emerge from the congress to establish the principles by which China will operate over the next year or two.
Policies are not expected to directly mention wool, but directions to improve the business environment translate to better lending criteria, further business support and hopefully new uniforms for many government departments to kickstart the textile industry again in China.
Until the general direction, and the text of the public announcements had been issued, no State Owned Enterprise had been willing to contract new orders lest they contradict the intent of the CPPCC.
In coming days, the way forward should be much clearer, and the green light given for many projects which had been on ice.
How much translates back to more demand in the auction room is not yet known, but in the past Chinese uniforms have provided a boost in demand for 19 to 22-micron fleece in particular.
This somewhat still tenuous development, together with the continued opening up in Europe will be enough to maintain a floor in the basement of where the wool market currently resides, through until after the auction recess in July when better volumes, better quality and more stable demand should reinvigorate the market.