The widespread impact of the COVID-19 pandemic and restrictions on both supply and demand in the global wool industry have become very clear in the past two months.
Supply has been hard hit by these restrictions - and a drop in wool prices - as evidenced by small weekly auction offering volumes in Australia of about 15,000-25,000 bales.
The Australian Wool Exchange (AWEX) reports that auction offerings are down by 12.5 per cent for the season-to-date and latest data from the Australian Wool Testing Authority (AWTA) shows the amount of wool tested in May 2020 was 28 per cent lower than in May 2018.
That was the biggest year-on-year fall for a month since August 2003 and is, in part, likely to have been caused by COVID-19 restrictions constraining shearing - and a lack of immediacy for growers to get wool to market given the decline in wool prices.
This is in contrast to May last year, when the AWEX Eastern Market Indicator (EMI) was sitting at about 1900 cents a kilogram.
For the season to the end of May 2020, the weight of wool tested was 7.6 per cent lower than for the same period in the 2018-19 season.
The weight of wool tested of 18.5-micron and finer types during May 2020 was down by 28 per cent; the 19-20-micron range was 25 per cent lower; the 21-24-micron category was down 30 per cent; the 25-28-micron range fell 40 per cent; and the 29-micron and broader category was down 23 per cent.
All states also saw big drops in the weight of wool tested (as measured by Wool Statistical Area), led by South Australia (down by 47 per cent); Victoria (down by 33 per cent); Tasmania (down 27 per cent); and New South Wales (down 25 per cent). Western Australia and Queensland had more moderate (although still large) declines of 15 per cent and 14 per cent respectively.
On the demand side, the results from the annual survey of wool textile conditions from the International Wool Textile Organisation (IWTO) were hugely negative for all sectors of the wool textile industry - from early stage processing, spinning, weaving and knitting to garment making and interior textiles.
These results were presented at the IWTO's Digital 2020 Congress in the second half of May.
During the event, all sectors of the industry and all countries reported a massive drop in wool production levels this year in the midst of the COVID-19 pandemic.
Survey respondents expected only a very small improvement by the end of the year, and almost all sectors reported that stock levels had lifted sharply this year - except for the garment making sector.
But in all sectors, stocks are reported to be too high and this could mean the prospects of a strong recovery in raw wool demand in the short-term are limited.
The poor business conditions in the wool textile industry led to a sharp drop in demand for raw wool and exports from the major wool producing and exporting countries.
The drop in raw wool exports in April 2020 from three of the other major wool exporting countries were far greater than from Australia.
The volume of exports in April from New Zealand, Argentina and Uruguay plummeted by 82 per cent, 75 per cent and 80 per cent respectively.
This compares with the still significant, but more moderate, 16 per cent decline in exports from Australia in April.
The falls in exports from these three countries in March were also larger than the decline for Australia.
Exports to all of the major processing countries recorded sigificant year-on-year declines in April.
Exports to China, the largest destination, saw the smallest decline of 31 per cent. Exports to Italy were down 70 per cent, exports to Germany were 67 per cent lower, exports to 'other' European countries were down by 79 per cent and exports to the Czech Republic slumped by 87 per cent.
Exports to India fell by 85 per cent and exports to 'other' countries, including Egypt, Malaysia, Japan, Korea, Taiwan and Thailand, fell by 58 per cent.
The impact of the COVID-19 restrictions on both wool supply and demand have been clear and dramatic.
The Organisation for Economic Cooperation and Development (OECD) expects the current quarter (April-June 2020) to be the worst for the impact of COVID-19 on world economies.
As movement and health restrictions ease around the world, business will begin to gather pace and economies will start to recover.
We are already seeing this, with mills in China being back in operation for the past couple of months and mills in Europe also back in production in recent weeks - albeit, in both cases, at reduced capacity.
It is therefore likely that we have seen the most intense impact on the Australian wool industry and this will start to diminish in coming months, albeit slowly.
In other news, nominations are open for the NCWSBA Wool Broker Award for 2020.
The award recognises excellence in wool broking by a younger member of the Australian wool broking industry - be it client servicing, auctioneering, innovation or other aspects of wool broking.
This year's award winner will be granted an all-expenses-paid trip to Kyoto, in Japan, to attend the 2021 IWTO Congress in May 2021.
Nominations close on Friday June 26 and application forms are available from: firstname.lastname@example.org