Australia's wool market is following a familiar pattern, as three distinct segments continue to move in different directions.
The "sum game" - or average - is unchanged, but the different categories are following very different paths.
Superfine and fine Merino types are continuing to enjoy solid demand, due to falling supply, and are consequently recording higher and higher prices.
Medium Merino wools have a growing supply base. But average - at best - demand continues to drift sideways for free or nearly free (FNF) types, and demand is down for the less desirable, high vegetable matter-content clips.
And prices for crossbred wool, in the face of a continued overburden of supply and very little new demand, are drifting further down.
Buyers from Europe, India and Japan are increasingly more active in the market - albeit in a limited quantity.
But their presence is increasing competition for the small quantities of superfine wool available, and making Chinese buyers work quite a bit harder to secure what they need.
An ongoing reduction in production of cashmere fibre, and disruption of the supply chain from Mongolia and Iran - as well as various government intervention programs in producing countries - means much of the best quality knitwear this season is going to contain more Merino and less cashmere.
This is, in part, driving the demand for superfine Merino wool and is good news for its future prospects - provided consumers are pleased with the garments they purchase.
Superfine Merino is an equivalent - or better - fibre than cashmere in terms of processing performance. It is longer - yet the same micron in fibre diameter - and much, much cheaper and easier to source.
If some of the prestige of the noble fibre can be attributed to superfine Merino, there is the potential for the price of the best Merino wools to push up towards the level where cashmere is traded.
The depth of high quality, high performance garments currently being produced to hit the retail shelves in the coming season is going to tap into the emerging cashed-up consumer.
These individuals, who have been in lockdowns and endured the difficulties of COVID-19, want to reward themselves.
Many retailers are reporting a dramatic increase in activity when consumers have been able to access their wares again, and it is very noticeable that high quality, high priced items are on the shopping list.
This is a big tick for superfine Merino sweaters, activewear and the raft of other new and not so new products available.
Medium Merino wool growers are understandably frustrated at the current discounts being applied to some of their clips that contain a bit of vegetable matter, which is neither extreme, nor overly difficult to process.
With plenty of 20-22-micron Merino clips being offered, and only the odd new order coming into the market each day, buyers are simply able to pick and choose the lots they purchase.
Despite the better underlying specifications of much of this sound, white, bright wool, a lot of the inexperienced - or less creative - topmakers continue to purchase the generic Chinese government types, which must contain less than 1.8 per cent vegetable matter.
Those who are prepared to think outside the square and operate on the wools carrying more fault are enjoying a virtual smorgasbord of available clips.
But, simply due to supply and demand forces, the price discounts are widening.
Just as we typically see in September-October, when there is a plethora of tender wool on the market, when there is too much of something, the discounts for that fault increase. But at present it is reaching extreme levels.
There is some new business being written for medium Merino products.
But supply has been growing even faster due to low rainfall, consistent shearing patterns and some wool obviously coming on to the market from on-farm stocks.
Uniform inquiry from China seems to have slowed in recent weeks and, although it could resume any day, the general trend to less office work is certainly restricting sales in the traditional worsted suit market around the globe.
There are plenty of inner layer products being made from 20 and 21-micron Merino wool, and many other successful new innovations using medium Merino as the base.
But the increased supply, courtesy of the end of the drought (in most areas), has boosted production above expectations.
The retail industry has had to pivot so many times in the past 18- months, that it is perhaps still a little dizzy and struggling to form a longer-term plan at present.
When the selling season gets underway in September, it will be able to move forward to next year with more confidence. At least, that is the hope at this stage.
Crossbred wools continue to wait for that special new product to provide the catalyst - or spark - to ignite new demand.
Perhaps if every time a rack of lamb was sold, the consumer was given a pair of woollen socks as well, we could get things moving again.
Much discussion continues about potential ways to boost demand.
But the industry is mindful of current low prices, which are not sustainable from a grower perspective.
So, any product that creates demand must also be capable of continuing to survive when prices return to a higher base.
It will inevitably arrive.
But the world is still in such a state of turmoil that processors, wholesalers and retailers are reluctant to stray too far away from product central at the moment.
So, the age-old products - such as knitwear - with modern improvements are obviously a safe and steady path to follow.
Activewear and leisurewear have established a secure footing in the market now and will continue to grow, particularly with the environmentally conscious consumer.
The current market trend will more than likely continue for at least another couple of weeks, before settling down to a more benign affair during the processing "quiet time" in July-August.
There are plenty of hiccups occurring in other commodity markets, however, to make the wool industry wary of thinking prices will continue to rise unabated.
- ELDERS WOOL
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