THE wool market was able to claw back almost all of the previous week's losses and the Eastern Market Indicator (EMI) closed up by 17 cents a kilogram.
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A smaller offering of just less than 43,000 bales no doubt contributed to the positive movement as did the desire of mills in China to have sufficient working stock for their return following the Chinese New Year break.
The first day of selling (Wednesday) recorded the best performance with the market largely unchanged on Thursday except for superfine wools which still managed to increase by 10c/kg to 20c/kg.
A scenario, which was repeated in the South African market, also showed strong gains on the first selling day but flat-lined on the second.
The New Zealand market showed less exuberance than previous weeks with the main types only slightly firmer.
Some wool changed hands in the Chinese market during the week and the mood in general is considered optimistic.
Few participants believe the market will fall from current levels and so are generally reluctant to sell their stock at this price, or certainly not below today's level.
One or two top making mills do have excess stock and are offloading whenever an enquiry is available, but that is more likely to be a short-term cash flow issue.
Orders from overseas to the processing sector in China have improved, however the domestic market is still very quiet.
All processing mills in China except for those with urgent export orders have now closed for the Spring Festival that revolves around the Chinese New Year on January 31.
Many have taken a longer break than in previous years with less demand locally and the uncertainty created by the Chinese government austerity programs.
Recent data released showed China's gross domestic product growth for the fourth quarter registered 7.7 per cent and also reached 7.7pc for the full year, which was above the official target of 7.5pc.
According to HSBC this now creates a platform for Beijing to continue its economic reform program in 2014.
They expect the growth momentum to be maintained in the coming year thanks to the improving external outlook, mild inflationary pressures and reform measures designed to boost private investment and consumption.
While the Chinese economy is being restructured to be fuelled more by internal consumption rather than government created infrastructure programs, the health of the world economy remains vital, not only to China's economic performance but the fortunes of Australia's woolgrowers.
The Italian market itself is still depressed however the processing companies there are starting to see more orders from within Europe and also further afield.
Knitwear types continue strongly but also recently orders for worsted suiting has improved.
This has been borne out in the auction this week with strong support for quality superfine types.
Cotton and plastic fibres all rose in recent days and add to the positive outlook for textiles.
As the boffins at the International Monetary Fund (IMF) reiterated in the recent forecast the world economy is recovering.
It is not a uniform recovery with some basket cases still evident, but overall they expect growth in 2014 to reach 3.7pc compared to the 3pc in 2013.
Small progress, but positive nonetheless and growth in consumer confidence will follow in due course.
Both futures market platforms showed more activity this week with ICAP trading good volumes for nearby delivery and trades on Riemann as far out as December 2014.
Any improvement in the spot market during coming weeks will provide good hedging opportunities for the spring.
Bruce McLeish is the wool sales manager for Elders.