The Australian wool market looked more positive than it has done for the last three sale weeks, stepping up 54 cents for the AWEX eastern market indicator (EMI) to close at 1887 cents per kilogram, clean, on Thursday.
It was a welcome relief for wool producers, who are already feeling the effects of the drought through lower yields and declines in wool clips.
According to Australian Wool Innovation (AWI) trade consultant Scott Carmody, the improved market was due to greater confidence and stronger demand.
"The results were stark, positive and immediate," Mr Carmody said.
The results were stark, positive and immediate
"The price gains that eventuated almost halved the losses of the previous three sale weeks."
Main buyer focus was on the better prepared lines with these wools rewarded by gaining the largest increases
Price gains across all microns were between 40 and 80c in the Merino sector and after the large losses experienced at the previous sale, the crossbred sector bounced back strongly with the entire crossbred range generally rising by 40 to 60c.
The pass in rate also improved considerably. After recording the highest national passed in rate of the previous two seasons of 28.2 per cent last week, the price increase helped to reduce the passed in to just 8.5pc for the series.
Mr Carmody said whilst price gains were common across all of the Merino sections, many individual lots bearing the better specifications were over 100c dearer.
He said the biggest change that came over the market was sentiment.
"Buyer confidence was buoyed by the writing of new business which was mainly into China, but smatterings of interest also appeared from across most of the global wool destinations," Mr Carmody said.
"Exporters were said to be continuing their generally risk-adverse trading even in light of prices being put on the table that appeared "over the market", which is rare indeed.
"The demand from overseas buyers remained, on many occasions, unfulfilled within the environment of swiftly rising auction prices."
The market movements of the past month probably signals the rule of thumb of the industry at the moment, Mr Carmody said.
"Rapid falls followed by immediate reactionary gains is generally indicative of supply winning over prompt demand," he said.
"Demand for all wool types is still evident and is the key driver of wool price, but that demand has has turned over the past six to 12 months to be sporadic and softer than the peak demand seen in late 2017 and early 2018.
"The subsequent 10pc loss of our national clip is now assisting in the maintenance of price levels."
Mr Carmody reported since August last year when the EMI was 2116c/kg the trend has been a softening market. The EMI dropped to 1776c/kg in November 2018, then rallied to 2017c/kg in February this year.
The biggest drift was last week's 1833c/kg result.
He said in what was a positive week for sellers, one slight negative was the relative inactivity once more of the larger Chinese indent operators who generally lead in setting the market.
"For the market to go up so strongly in the face of that weakness can be read as both positive and negative but more selling weeks are required to see if a change in trend is underway," Mr Carmody said.
This week the national quantity reduces to 23,610 with only Sydney and Melbourne selling centres in action as the Fremantle region takes a one-week recess.
This will be the smallest offering nationally offering in over two years.