After ongoing market retraction since March, the wool market has finally made a significant step forward.
Last week, all market indicators were in a positive space.
A combination of low wool prices, the exchange rate of the US Dollar to the local Australian currency and low volumes offered at auction resulted in the Australian Wool Exchange (AWEX) Eastern Market Indicator gaining 39 cents a kilogram last Tuesday and then losing 7c/kg on Wednesday to close at 890c/kg. In US Dollar terms, the EMI finished at 643c/kg.
The West Australian regional indicator rose 27c/kg on Wednesday to finish at 922c/kg.
Another highlight of the week's auctions was a low national pass-in rate, at an average of 5.6 per cent.
While this paints a positive picture for the wool industry, reports from the physical auctions suggest the hard times for the market are certainly not over.
As was pointed out, last week's results do not indicate that there has been any more demand at a retail level from overseas mills and customers.
The COVID-19 pandemic is still hurting economies, and consumer demand is still low. Realistically, several key factors aligned to see the interest from overseas.
The demand at the physical auctions last week spilled over to the AuctionsPlus Offer Board, with buyers and exporters purchasing 165 bales across the seven days.
Online, 14 and 17-micron fleece wool sold up to 2400c/kg and 1010c/kg (greasy), or 3265c/kg and 1345c/kg (clean), respectively.
Lines of 18 and 19-micron fleece wool sold up to 800c/kg and 610c/kg (greasy), or 1148c/kg and 940c/kg (clean), respectively.
In 20 and 21-micron fleece wool categories, prices reached 665c/kg and 625c/kg (greasy), or 930c/kg and 904c/kg (clean), respectively.
The top priced lot was a line of 13.7-micron AAA superfine fleece wool, which was 80 millimetres in staple length. It was offered by Roberts of Tasmania, branded Glen Stuart and sold for 3000c/kg (greasy) or 4219c/kg (clean).
Merino pieces this week were topped by a 19.6-micron line, which was offered by Nutrien Melbourne. This lot was branded Warrigal Park, had a vegetable matter of 1.9 per cent, a staple length of 86mm and sold for 545c/kg (greasy), or 852c/kg (clean).
Looking ahead, there has already been more wool sold early this week.
If the market can hold similar levels to last week, this would be a positive step for the industry.