THE wool market surprised many participants last week with a much stronger performance than expected.
While there had been some business done the previous week, and there was expected to be a positive tone, it just got better and better as the week progressed.
A total offering across Australia of just under 30,000 bales, which these days is considered 'on the large side' was keenly sought after, particularly at the finer end.
The Kiwi's added to the total with 3000 bales being offered in Melbourne, and South Africa put up 6500 bales nearly all of which were consumed by a suddenly hungry wool trade.
Price increases ranged from more than a dollar for the superfine Merino fleece, to a minimum increase of 50c for all other Merino fleece types.
Skirting types increased by 60c, while the carding wools added 30c. The finer crossbreds, being blended with Merino or going into the hand knitting industry jumped by 30 to 50c.
However, the coarser crossbreds struggled to rise above the bargain basement price levels they currently occupy. The New Zealand market did rise by between 2 and 5 per cent on Thursday providing a glimmer of hope for this sector.
AWEX's Northern Market Indicator closed up 38c on 993c. The 17 micron indicator closed on 1474c, 18 micron 1279c, 19 micron 1096c, 20 micron 994c, 21 micron 956c, and 28 micron 466c.
Overall the Australian wool market moved up by around half a dollar in a welcome sign that, like the Adelaide Crows, it can string a couple of wins together.
Is it too early to call it a recovery? Probably yes, but there is still some ongoing business being written ahead of another small sale this week, with only 25,000 bales available across Australia currently on the roster.
Exporters and traders are being very cautious and selective with the business they write to ensure they do not oversell and leave themselves vulnerable in a tight supply situation.
This week's designated superfine sale in Sydney could possibly see a return to the more extreme price jumps for those superior lots of superfine wool - which are few and far between given the seasonal conditions in early 2020.
Vegetable matter has increase significantly, as has yield thankfully, and also the Australian clip is broader as a result of better growing conditions.
Andrew Woods from Independent Commodity Services reported that the average Merino micron for the current season to date is 0.37 micron coarser than a year ago, and significantly the broadest it has been for two and a half years.
This should keep the pressure on the superfine buyers, and keep the basis trending wider over the remainder of the current season.
So, while this week should see another "green" market report, the wool industry will still bounce about over the next couple of months to keep everyone on their toes.
The volatility which the wool industry has become famous for has not disappeared in the current crisis.
The volatility which the wool industry has become famous for has not disappeared in the current crisis.
- Bruce McLeish, Elders
For now, the trend is looking favourable, but undoubtedly there will be a hiccup when we least expect it.
As yet the demand is mainly driven by the early stage processing sector and not from retail activity.
However, there is a noticeable change in the mood throughout the chain with, as mentioned previously less of a feeling of despair pervading the trade.
European customers are talking more, and Chinese uniform orders are up and about.
But the middle of September is not normally deep enough in the cycle for next season's orders to emerge. However, we do need to question 'what is normal in 2020' though.
While we wait for the world's retailers to make some sales and then discuss new orders with their supply chains, some encouraging news is emerging from at least some of the retail players.
H&M, the world's second-biggest clothing retailer returned to profitability in the third quarter, which runs from June to August, according to a Financial Times report.
Cost cutting and fewer discounted sales had provided a boost to the bottom line, along with a move towards higher value collections.
About 200 of the chain's 5000 stores remain closed, down from 900 at the beginning of June, and 4000 in April.
The chief executive of H&M was expecting the group to come out of the coronavirus crisis "stronger" with less physical stores than before and a greater online presence.
Perhaps, finally the demise of fast fashion is nigh, and better value clothing will come to the fore.
Obviously, this represents good news for the wool industry in the longer term. Much has already been written about the struggles of worsted fabric items, such as men's suiting, but Merino wool knitwear certainly features strongly in the H&M range.
China's retail activity also saw a welcome boost last week with the release of August data by the Chinese National Bureau of Statistics. Retail sales grew by 0.5pc compared to the same month last year, up from minus 1.1pc in July and ahead of analysts' expectations of a zero reading.
This marked the first growth in the retail sector this year according to an article in the South China Morning Post. Together with a better than expected increase in manufacturing production for the month the data points to a sustained recovery in the world's second largest economy.
While much has been written about the wool industry's reliance on China's early stage processing in particular, the importance of China as a retail consumer of woollen garments has definitely been a factor in the decrease in demand over the past six months.
A resurgence in activity of the Chinese consumer will be applauded by everyone involved in the industry.
So, a few things are starting to go right and there is definitely light at the end of the tunnel, but hang on for the ride, as it is sure to be a little bouncy over the coming months.