A FEELING of relief followed the conclusion of wool sales in Australia last week as well as in South Africa.
The market did not exactly shoot upwards but was steady and positive with good clearance rates indicating that growers who offered wool for sale last week were prepared to accept the current market level.
AWEX's Northern Market Indicator closed down 1c on 1159c. The 17 micron indicator closed on 1586c, 18 micron 1408c, 19 micron 1284c, 20 micron 1221c, 21 micron 1200c.
Nobody is happy with the COVID-19 price level, but it is what it is, and when consumer activity ramps up, so will the price.
Until then, the wool market is stuck in a bit of a rut, bumping along in a trading range and desperately hoping that things do not get worse.
There are some bright spots in the market with knitwear types still simmering away, and a few more uniform orders surfaced in China last week leading to a better tone for Merino fleece.
Crossbreds followed the general tone of the market and rose a few cents, but nobody is under any illusions about the lack of demand for that segment and the world-wide glut of these types.
Cardings continued on their volatile journey and eased by 20c for the week.
So, with some types up and others down, the overall tone for the market was positive.
An increase in the roster for the final week of selling prior to the recess was enough to spook some Chinese traders and mills, but realistically and increase of 6000 bales is not going to change the world.
It is more a case of highlighting how nervous people are right now. All of the major Merino types have been operating in a price range for the past three months in US dollar terms.
This price level has been almost exactly at the same level as we saw back in 2015, before the three year uptrend began.
Holding the base at this level will be a challenge over the next three months as supply increases right across the southern hemisphere but once we get into the last quarter of the calendar year the outlook should be a bit more optimistic.
The challenge for the industry will be to determine which wool is required and desired, and which is 'just wool'.
Stocks in grower's hands are increasing across the globe, not to an alarming level, but are predicted to be around 30 per cent of annual production by the end of the year.
It is not just in Australia that growers have been reluctant to sell, but the Kiwi's and the South American's have not been willing, or in some cases have not been able to sell.
While it is very difficult to get accurate information on grower stocks at the best of times in Australia, it is not hard to work out that the composition of the wool being held is skewed towards the broader edge.
Demand for crossbred wool, and therefore prices peaked a little later than merino on the back of the latest fake fur phenomena in China, but since early 2019 it has been a one-way trip downwards.
There will be different levels of demand in the months ahead and the prices of individual segments will move in possibly disparate or opposite directions.
A superfine knitwear indicator will be a very different price chart compared to a hand knitting yarn type of 28 micron.
The drivers for a resurgence in demand, and the stock available to draw on when that demand arrives will make for a very interesting market, and to lump all the prices together and talk about 'the wool market' will be very misleading.
At the coarse end, demand for woollen carpets in recent years has been largely driven by the construction of buildings in China that needed to be carpeted.
While the Chinese government is temporarily baulking at providing too much more stimulus into their economy, the simple facts mean that to maintain the big ship on an even keel, a lot more stimulus will be required in the months ahead, and this will involve a lot of new buildings.
Even in China they are now aware of the fire safety rating of a building and will be using less flammable cladding on the exterior.
To then line all the halls with petrochemical products just destroys the building's safety and environmental credibility so wool carpets remain a logical choice.
We just need more offices, hotels and homes being built around the globe, and as we keep being told by developers' construction means jobs, so there is sure to be plenty of stimulus activity directed to this sector.
But, at the coarse end of the Australian clip - 28 to 32 micron - the usage and therefore demand will be driven by different factors and will also be affected by stocks in the pipeline, or in Uruguay, Argentina or Russia.
Some of the retail activity for this wool will be driven by the natural, environmental and ethical advantages of the product.
There is still a growing resurgence in hand knitting and weaving, and as yet an untapped quilt and underlay market across Asia in particular. But, a lot of the sales are driven by price and a cheap way to have the word wool on the label, or to fit within a certain duty or tariff category.
So, a certain portion of the manufacturers and retailers will seek to verify and trace the origin of their product, but to a larger proportion it is just a number, and will only be stocked if the margin is better than another product.
Of course, if the fashion industry were to suddenly resurrect fake fur made from 28 micron pure wool in a market of 250 million consumers again, the stockpile of greasy wool in this segment would disappear almost overnight.
In the meantime, growers, buyers, exporters and early stage processors are all hoping that the market can remain firm this week and go into the recess with its head held high.
Retail activity is increasing in those countries where COVID restrictions are successfully lifting, so there is certainly light at the end of this long tunnel.
