Wool prices swept-up in gradual emergence from pandemic lockdowns

Looming new season and re-emergence of retailers spur wool prices

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Superfine Australian Merino wool led a modest price rise across most types at national auctions last week on the back of continued low supplies and a growing trend towards using finer wools in 'athleisurewear'.

Superfine Australian Merino wool led a modest price rise across most types at national auctions last week on the back of continued low supplies and a growing trend towards using finer wools in 'athleisurewear'.

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Most major wool types enjoyed a price rise last week as supplies tightened further and a new season looms.

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There was an overall positive result for the national wool market last week - with a nice 'green tinge' to the Australian Wool Exchange (AWEX) market report.

Superfine Merino fleece, including the few bales of ultrafine Merino on offer with good specifications, had a price increase of more than 25 cents a kilogram for the week - as did the medium Merino fleece category.

Slightly better yielding-wools are becoming more prevalent on the showfloor and getting some buyers very excited. Although, high mid-break and low tensile strength is still providing a challenge for topmakers.

Skirting types followed suit, as knitwear orders ticked up a notch.

Carding wools maintained the positive momentum seen during the previous couple of weeks and, although these are still typically out-of-season, they have obviously reached a point where they are simply cheap enough that they can no longer be ignored.

Crossbred wools were dragged along with the general market, despite no discernible change in the demand portfolio for these types.

A weaker US Dollar shaved-off some of the Australian wool price benefits in local currency terms. But the market was still strong enough for every segment to finish the week in positive territory.

Not a huge amount of follow-on business has been floating around. But there is probably enough to keep things ticking-along - so this week should still see solid prices for most types.

Buyers and processors are eagerly looking forward to new season wool, which will undoubtedly have better yields. But (as usual), increased vegetable matter (VM) may be an issue in the back half of next season.

When, and how much, of the held wool around the country comes on to the market is also a topic of discussion among the trade.

Everybody in the sector is aware of the rough amount of wool being held. But the composition of this stored wool - in terms of fleece, pieces and cardings, Merino or crossbred - is just a guess.

What is totally unknown is when this wool will be put onto the market.

For some sellers, price will be the trigger. There is also a portion waiting for the new tax year, but there is no set formula overall.

This does create a lingering concern, however, that too much, too soon could disrupt the delicate supply and demand balance.

A meagre 17,000 bales is rostered for auction this week, meaning supply is certainly not dampening prices at present.

The positive signs emerging from different corners of the globe as society emerges from under the COVID-19 lockdown 'blanket' are just enough for some to think that we are turning the corner - and that market prices may trend upwards again for many commodities, not just wool.

The Chinese consumer mindset is still a long way from the level of enthusiasm it was at this time last year.

While China emerged first from the lockdown, the second-round effect of the drop-off in export volumes as others went into lockdown raised serious doubts over their financial and employment security. Getting these consumers back up to full shopping confidence is proving to be a challenge.

'Wellness' is probably one of the most often used terms, certainly in the developed world anyway, where we have the luxury of being worried about such things - as opposed to food and basic survival.

The recovery of Merino wool prices may well be linked to the pursuit of 'wellness' and it can certainly be a positive connection as people emerge from isolation and get moving again.

Practically every manufacturer of traditional worsted suit fabric has been doing it tough for the past few years, and incredibly tough in the past five months.

With retail shops and offices closed, consumers have not been buying new or wearing suits, and wool tends not to be an item easily purchased online. These trends have seen demand collapse.

Purchasing other garments online is more practical. But to purchase an expensive item that can look fantastic - or terrible depending on how it matches your body shape - is best done with expert advice in person, in-store. So, unfortunately, this relatively large sector of the wool retail market has screeched to a halt.

Also, what initially started with the casualisation effect due to 'causal Fridays' in offices, has become much more serious with the new work-from-home scenario.

But there are many different garment sectors that are increasing in activity, while the more traditional sectors suffer.

Merino wool has already established a strong presence in the outdoor and sporting wear sector and people are celebrating the end of lockdown by getting out-and-about and exercising.

The new normal will see much more importance of this sector as a percentage of wool consumption.

So, as the wool recovery gathers pace - aided by government stimulus programs such as the proposed European Commission's 750 billion fund (of which 500B will be grants rather than loans) - economies will get back on their feet and consumers will begin to earn and spend their own money again.

Nothing will be the same as it was before COVID-19. But industries that adapt quickly to the 'new normal', will the first to prosper.

Wool can be one of these sectors if enough companies get on board to produce garments that can be sold online, as well as in traditional 'bricks and mortar' locations, and offer garments that enhance a consumer's wellness - as well as tapping into the environmental benefits of the fibre at the same time.

Providing more bang-for-buck is going to be very important and a Merino wool garment which not only performs very well in hot or cold environments, but is also good for the planet should be a much easier proposition to sell than a piece of plastic that is uncomfortable, damages the environment and is only positive because it is cheap.

As global society re-opens, governments roll out further stimulus packages, people in the northern hemisphere get out and enjoy summer and businesses re-start production, markets - including for wool - will pick-up. But it will be a cautious time, with everyone in the industry likely to remain a bit jittery.

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