As we head into Christmas there is an air of optimism once more around the wool trade.
The major factors negatively affecting wool prices since the record high of 2116 cents a kilogram (clean) in August 2018, appear to be heading towards resolution.
Signs are good that the US and China intend to resolve the tariff dispute.
Some significant allowances have been agreed upon from both sides, representing a new willingness to negotiate.
As the freshly imposed tariffs are reduced or eliminated completely, expectations are that high volumes of textile products should initially be imported to the US from China.
This will enable a rapid reduction in stocks being held, which have clogged normal supply chain operation.
In turn, this will enable a steadier cash flow through the entire wool pipeline.
The road to Britain's exit from the EU is much clearer.
The UK elections cleared the obstruction created by the goings-on of bureaucracy incessantly for the best part of three years, and have given a clear mandate for the UK government to hasten down that path.
There are rumblings of a wish for Scottish independence and Ireland re-unification, which may become problematical, but as far as wool textiles go, those two events would not necessarily impede a betterment of wool's immediate prospects, as did the Brexit situation.
The US and UK are traditional and highly important markets for wool.
The potential settlement of both will aid in boosting the consumer confidence index, which is key to wool's price fortunes.
Confidence has been a missing ingredient in the global retail economy for the past 18-months, so when we look at a combination of positive outcomes, the results should be seen as an early Christmas present for those in Australian agriculture.
Wool, and more-so, Merino apparel items are discretionary spend items.
Recent retail results have been ordinary at best and survey results show that people are choosing not to spend in uncertain times.
Renewed confidence will help, but the shift to a more regular demand growth scenario will take a while.
While price levels remain in relatively good territory with the Eastern Market Indicator above 1500c/kg (clean), the first half of the wool selling season saw the EMI depreciate 12.7 per cent, at one stage hitting a low of 1365c/kg.
Confidence and demand are slowly recovering.
More certain is the reality of the global slump of wool supply and most notably quality Merino wool.
The market has so far failed to react to that impending shortage, and given the economy and world leaders behave rationally, competition should strengthen going forward and higher prices return in the near term.
Improved operating conditions throughout the pipeline, and more fluid cash flows, should enable that higher price for raw materials to be sustained.
We just need to add rain.
