The Australian wool market is continuing to regain some of its lost confidence of 2020, fuelled by demand from overseas buyers, reaching levels close to the initial Covid-19 induced market fall of April 2020.
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The Eastern Market Indicator lifted by 89 cents, or 7.4 per cent, to finish at 1291 cents per kilogram, clean.
But according to Australian Wool Innovation's trade consultant Scott Carmody, even though the steep price rise is good news for growers, big swings aren't always what is needed and a rise in the market on a slower scale is often safer.
"Markets that tend to react on a heated nature aren't very effective for the long-term, but for the short-term, for the people that are in the market, particularly our wool growers, this was a good week," Mr Carmody said.
"Individual types and microns in the Merino sector were all somewhere between 85 up to 140c dearer for the week.
"Crossbreds weren't left out, up to 70c dearer as well and on a percentage basis, they probably outperformed the Merinos.
"It is very reflective of a very much hand and mouth industry we have at the moment."
But although signs are positive he warned it was a little concerning that the rise was so steep and so swift.
"The fact is this week we are almost heading towards the US1000c mark," he said.
"What we need is a consolidation. Pre-Christmas the market had slow growth and slow growth is good growth. The market saw lifts of 10c, 20c, and 30c and that's consolidation in a market.
"That's building a market, building a price, and bringing everyone along.
"I don't think any growers like the big swings and I am almost sure the factories don't like the big swings."
There are estimates in the industry of somewhere between 150,000 to 250,000 bales of wool that are either still on- farm untested or still in brokers stores.
The build-up of these stocks, or what growers will do with these built up stocks now the the price of wool is growing, could dampen the market.
"I believe the build up of stock hit its pinnacle about a month or two ago," Mr Carmody said.
"If we can filter that wool onto the market it will be a much better result.
"But what we saw this week, I hold a bit of fear that we are going to see five or 10 thousand bales suddenly hit the market rosters, and that will dampen that rise."
Mecardo managing director Robert Hermann said this year has been a great start for the wool market.
"The market popped its head above 1200 cents last week. It's the first time the indicator has done that since October last year when it hit that for a week, but we had to go right back to May to see that again," Mr Hermann said.
"It was driven mainly by the fine wool market. We have seen this for some time as the volumes for fine wool supply started to contract as the drought impactors also contract."
According to Mecardo analyst reports, increased fine Merino premiums have lifted sub-16 micron prices above year ago levels.
The price strength seen in standard fine Merino fleece prices is also operating in low tensile strength and short staple length fine Merino wool.
Mr Hermann said this year has seen more wool sold per week than what was sold in the selling season for last year.
"Remembering the selling season had a bit of Covid influence in it towards the end of the season, but it's just a good indication that demand is pretty solid," he said.
The average clearance for January is 41,667 bales, while the average for the season to date has now lifted to 29,993 bales per week.
Released today, Rabobank's Agribusiness Outlook for 2021 forecasts a recovery in consumer demand is set to lift prices for wool.
