The Australian wool market has been relatively stable in the past few weeks, despite auction offering volumes continuing to be well above typical levels for this time of year.
Domestic prices - and those in several other wool producing countries - are well above the lows recorded in September 2020.
Wool exports from several of the major wool producing countries have also lifted, which has been helped by better price competitiveness for wool against other fibres and the start of some global economic recovery.
Wool prices in Australia have hovered around the same levels during the past four weeks.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) has been at about 1300 cents a kilogram - or US1000c/kg - but with some week-to-week variation.
The EMI is now between 40 per cent higher in Australian Dollar terms and 50 per cent higher in US Dollars than it was in September 2020.
Fine and superfine wool prices have risen by 50-60 per cent and medium Merino wool prices are up 30-40 per cent. But crossbred wool prices have had the lowest rises, up by 15-25 per cent.
These stable prices have come in the face of auction offerings that have been 11 per cent higher than in the past two seasons - between March and April.
In South Africa, which produces mainly Merino wool of 21-micron and finer, prices have followed a similar trend to those in Australia - in US Dollar and South African Rand terms.
Prices for crossbred wool of 32-microns and broader in New Zealand and the United Kingdom are just starting to show signs of a recovery - but only since January 2021.
This is a welcome relief for growers of this broad wool.
Since the low point in September, which was the lowest level for 20 years or more at 132c/kg, the UK wool market indicator has lifted by 33 per cent in Pound Sterling. Most of the rise was in March.
In New Zealand, the strong wool indicator has increased by 25 per cent in NZ Dollars and 30 per cent in US Dollars since September.
Prices for wool's major competing textile fibres have had a strong recovery from COVID-19-induced lows. The rise has been particularly strong since the start of 2021.
Acrylic fibre prices are up 25 per cent, polyester staple fibre prices are up 26 per cent and viscose prices are up 54 per cent.
Prices for nylon (polyamide) have risen more moderately, up by 15 per cent since the start of 2021.
Cotton prices have also seen only a moderate increase since the start of 2021, although these are 50 per cent higher than the low plumbed in March 2020.
As a result of the stronger increases in prices for competing fibres compared with the rises experienced for wool, the wool price ratio against cotton and synthetics has fallen back sharply since March 2020.
But, after dropping until January, the ratio of Merino wool prices against cotton has increased somewhat.
Against synthetic fibres, the decline in Merino wool's price ratio has been significant - particularly for 21-micron wool.
For the 28-micron wool price ratio, which is a ratio against the price for acrylic fibre only, the current level is the lowest since 2010 - and against cotton, it is the lowest since 2011.
This lower price ratio means wool is more competitive against these other fibres, which will encourage processors to use wool in place of these other fibres - notably synthetics.
Demand for wool sourced from Australia, South Africa and New Zealand has improved this season - highlighted by latest export data.
For Australia, the volume of wool exported in February jumped by 30 per cent compared with February 2020.
The main driver of this increase was a 64 per cent jump in sales to China.
For the 2020-21 season to February, Australia's total wool exports were up by 6 per cent to 163.5 million kilograms.
Exports by New Zealand were also 6 per cent higher for the 2020-21 season to February.
Its exports to China were up 3 per cent. But the main reason for the increase in New Zealand's exports was a 56 per cent lift in exports to India and a 38 per cent increase in exports to Germany.
The increase in sales to India by New Zealand was in stark contrast to the 47 per cent drop in Australia's wool exports to India this season.
Wool exports by South Africa were also up - by an even stronger 15 per cent.
This was helped by a 19 per cent increase in exports to China and a 21 per cent increase in exports to the Czech Republic.
In contrast to the increase in wool exports from Australia, New Zealand and South Africa, exports from the two major wool producing countries in South America - Uruguay and Argentina - fell in the seven months between July 2020 and February 2021.
Exports from Uruguay were 19 per cent lower, and exports from Argentina were down by 16 per cent.
These South American countries have had substantial declines in exports to China, down by 19 per cent for Argentina and 42 per cent lower for Uruguay.
Overall, exports from the five major wool producing and exporting countries were up by 4 per cent for the July 2020 to February 2021 period, suggesting a moderate improvement in demand.
One contributor to the signs of increased demand for wool is a recovery in the global economy after the massive COVID-19-induced shock in 2020.
The latest forecasts from the International Monetary Fund (IMF) make for better, more hopeful, reading than 12 months ago - when COVID-19 was first hitting the countries of the world.
A positive is that the decline in economic growth in 2020 was not quite as fierce as the IMF predicted in April 2020 - or in October 2020.
Also, the rebound in economic growth in 2021 and in 2022 is predicted to be stronger than the IMF expected in October.
After a contraction of 3.3 per cent in the global economy in 2020 - and a 4.7 per cent drop in the advanced economies - the IMF now expects the global economy to grow by 6 per cent in 2021 and then by 4.4 per cent in 2022.
There are significant uncertainties and variations in the recovery from the pandemic between countries.
This is best illustrated by which year the economies of each of the major wool consuming country will be back to - or above - the pre-pandemic 2019 levels.
The IMF forecasts that the economies of China, the US and Korea will all be back to - or better than - the 2019 level in 2021.
Japan, Germany and France is expected to be back to 2019 levels in 2022, and the UK will be back to its 2019 level in 2023.
Italy's economy is the worst affected of the major wool consuming countries and won't be back to 2019 levels until 2023.
- Note, nominations are now open for the NCWSBA Wool Broker Award for 2021, which recognises high-achieving young wool broking staff. Details and application forms are available at: www.woolbrokers.org/member-brokers/wool-broker-award; or emailing: info@ncwsba.org.