October has been a stellar month for Australian wool prices, continuing the rebound seen in the second half of September.
In the four weeks to October 23, the Australian Wool Exchange Eastern Market Indicator (EMI) jumped by 183 cents a kilogram - or 18 per cent - to 1219c/kg. This was its highest level since May.
Broad crossbred wool values have increased the most - up by 30 per cent or more from a low base.
But Merino wool prices have also lifted solidly - by about 15 per cent.
This recovery seems to be a combination of modestly improved raw wool demand and a bounce-back from wool prices over-shooting on the low side in September.
Australian wool prices have fallen sharply in the past 12 months, even after the recovery in recent weeks.
The biggest drops have been for crossbred wool, particularly at the broad end.
So, where does that leave prices in historical terms?
At the current level, the EMI is at the 72nd percentile, which is down from the 89th percentile a year ago. That means current prices are higher than 72 per cent of prices since 2000.
So, while current values are substantially lower than at 12 months ago - and even more so compared with two years ago when prices were at record levels - there have been 673 sale weeks in the past 20 years when the EMI was lower and just 265 sale weeks when prices have been higher.
That is quite remarkable given the awful economic and retail conditions around the world at present, courtesy of the COVID-19 pandemic.
In percentile terms, the EMI in US dollars has pulled back by more.
This time last year it had fallen to the 76th percentile - after peaking at the 100th percentile in August 2018. It is down to the 53rd percentile now.
Even so, there have been 499 weeks since 2000 where the EMI was lower than current levels in US Dollars.
The changes in the EMI mask some significant differences for each micron category.
For example, the price for broad crossbred (32-micron) wool is at just the 10th percentile in local currency terms - although this is a significant improvement from a week earlier.
The 28-micron price guide (MPG) is at the 49th percentile in local dollar terms, after being at the 37th percentile a week earlier.
The prices for fine and superfine Merino wools are considerably better, with the 18 MPG at the 72nd percentile in Australian dollars and the 58th percentile in US dollars.
The 20 MPG is at the 65th percentile in Australian dollars and the 52nd percentile in US dollars.
One factor which could dampen a continuation of the recent lift in wool prices is supply, which has been constrained in recent months due to the ongoing - if fading - effects of drought, and as growers hold wool back from sale.
There are just below 44,000 bales rostered for sale this week, which could prove a challenge - even though it is a typical weekly offering during the spring flush.
According to data from the AWEX Weekly Market report, there have been 418,697 bales offered for sale at auctions so far this season and 369,119 bales have sold.
Just below 10 per cent of the wool offered this season to date is re-offered wool.
These season-to-date figures compare with the statistics from last season to week 17, when 427,937 bales were offered and 354,067 bales had sold. Of the bales offered, 11.1 per cent were re-offers last season to week 17.
In other words, there has been a 2.2 per cent decline in the number of bales offered this season.
But there have been 15,052 bales - or 4.3 per cent - more bales sold this season than last season.
The pass-in rate this season-to-date is just 11.8 per cent, compared with a pass-in rate of 17.3 per cent last season to week 17.
The lower pass-in rate and higher total number of bales sold this season has occurred despite the average EMI this season being 1015c/kg - or 35 per cent lower than last season's average to week 17 of 1550c/kg.
The change in auction offerings for this season to date is quite a bit smaller than the decline in the weight of wool tested.
The Australian Wool Testing Authority (AWTA) reports that, to the end of September, the weight of wool tested was 7.8 per cent lower than for the same period in the 2019-20 season.
This decline comes even though the weight of wool tested in September was 7.8 per cent higher than the weight tested in September 2019.
The only state to record a drop in the weight of wool tested in September was Queensland, with a sharp 29 per cent fall compared with September 2019.
In contrast, Tasmania recorded a 35 per cent increase in wool tested in September - on a Wool Statistical Area basis.
There are signs of recovery for New South Wales following the long-drawn-out drought in that state, with a 15 per cent lift in wool tested in September.
These season-to-date figures probably do not reflect actual production trends, with numerous anecdotal reports of wool being withheld from the market and being stored on-farm.
Who knows the extent of this on-farm storage?
It will make the Australian Wool Production Forecasting Committee's job harder when it comes to review its season forecasts at its next meeting in December.
On the marketing side, the signs of an improvement in raw wool demand can be seen in Australia's wool export data for August.
The total volume of wool exports from Australia in August 2020 was 27 per cent higher than in August 2019.
The big increase was from China, with export volumes up by 44 per cent.
Exports to the Czech Republic were also up very strongly - by more than 100 per cent, according to the data.
Despite the increase in volumes in August, Australian wool exports for the 2020 calendar year to August were down by 12 per cent.
Statistics and reports show China's economy is recovering and consumer demand is waking up from its COVID-19-induced slumber.
We can hope this will lead to a continuation of the recovery in raw wool demand, which in turn will help to continue to boost wool prices and absorb additional auction volumes.
Even so, there are risks and concerns ahead - given the second wave of infections in Europe and re-instated lockdowns and restrictions in some countries - which could result in a bumpy recovery.