Australia's wool market continued to struggle last week due to COVID-19-induced decimation of demand and a lack of high quality wools for buyers and processors to fill meagre orders.
Some buyers were heard to report returning from sales with half-finished orders because there was not enough suitable quality wool to buy.
The Australian Wool Exchange (AWEX) market indicators continue to reflect reduced prices for lower quality wools. The sheer weight of these types is skewing the indicators far into the red.
Buyers overseas are becoming increasingly frustrated at the pervasive negativity and are searching for a way to report the market with less emphasis on the poor end of the current offering.
Trying to have a reasonable conversation with customers about buying woollen products is difficult with these numbers floating around in the background.
With the COVID-19 pandemic, Australia's wool pipeline is becoming congested and the domestic industry will not survive if it does not pay attention to - and work with - other parts of the global supply chain.
To declare that adverse conditions have been overcome and industry stakeholders have worked together to sell more than $250 million worth of wool in this difficult time waves a red flag (or worse) in the face of customers or colleagues further along the pipeline.
Few garments have been sold during the past two months with the world in lockdown. So this $250m has simply been passed along the chain as inventory, with a market falling like a stone.
This has put immense pressure on the financial resources of exporters and early stage processors.
The bubble covering Australia and, perhaps, New Zealand may create good headlines locally. But the wool industry is not going to last very long without its global partners.
Growers have done an excellent job recently to stem the flow of wool going into the pipeline to match demand in terms of volume - if not necessarily quality - but others are clearly still wearing blinkers when it comes to considering the broader industry.
Some key processing and retail markets are re-opening after about two months of 'lockdown'. But this has yet to lead to a recovery in demand for greasy wool, top, yarn or fabric.
There are many American companies heading for the safety of the 'try line' and protection through Chapter 11 of the United States Bankruptcy Code - leaving their suppliers high and dry.
The long payment terms granted further along the pipeline mean that many metres of fabric have been delivered, but payment for this is now uncertain.
Many companies are facing financial difficulties, as not very many had the cash resources set aside to weather a storm such as this pandemic. Some are choosing to use this as an excuse to renegotiate expensive contracts, or cancel them altogether.
Even a well known, powerful vertically-integrated company in India - with dozens of retail outlets - has been rumoured to be cancelling hundreds of tonnes of greasy wool contracts.
Of course, many of the final goods which have been delivered to retailers is now 'old season gear' and no longer wanted. Shops are now stocking spring/summer collections and hoping customers will come.
A big shopping festival held during the Chinese National Holiday last week - called Double Five, as the May holiday had been extended to five days this year - led to retailers offering every incentive they could to get consumers through the doors.
While the total volume of transactions was suitably impressive, there is no illusion that retail is back to 'normal'.
Italians have been allowed to return to their office or factories and soon discussions will turn to getting wool mills moving again.
Getting retailers to focus on autumn/winter collections and start using the yarn and fabric already in production will be a challenge - and much will depend on the success of re-opening European society.
Recent Chinese data showed a 3.5 per cent rise in exports for the month of April, confounding an expected 15 per cent fall and outweighing a 14 per cent drop in imports.
This has boosted speculation that China could recover from its coronavirus lockdown more quickly than expected - and support global growth in the process.
The upcoming Chinese Congress, starting on 22 May, will see about 3000 delegates gather physically or virtually in Beijing and is expected to finalise much important government policy.
Following this event, we may have a much clearer picture of not only Chinese uniform orders, but wider stimulus packages to assist the Chinese/global recovery - and no doubt ratchet-up the importance of China on the world stage.
The upcoming US presidential elections will obviously encourage certain politicians to make outlandish claims about the source of COVID-19, which will not endear them to other members of the global community.
At the same time as US election campaigns ramp-up, we can also expect to see some posturing from the Russian leadership team - as a 'pseudo' election campaign is undertaken to make changes to the constitution and restore public confidence.
In the meantime, we hope to see the wool market splutter back to life this week and at least find a temporary base while the re-opening of society and supply chains continues.
