Australia's wool market received a significant boost from the dot plot last week.
The strength of the price increases surprised everyone in the trade - well, almost everyone, as 4 per cent of the sale lots were inexplicably still passed in for one reason or another.
The overall Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) rose by an impressive 55 cents a kilogram in local currency terms.
In US Dollar terms, the increase was much more staid at 25c/kg added to the indicator.
The Europeans sat in the middle, as usual, with a 36c/kg rise in Euro terms.
The Fremantle centre was playing catch-up last week, after a week's recess the previous week, and rises in the west topped-out at more than 130c/kg.
But in the eastern states, some of the superfine Merino categories managed to notch up a century increase as well.
Most of the superfine and fine Merino types were 80c/kg higher in what was a pretty frenetic market.
Medium Merinos were not far behind and had rises of 70c/kg across the two selling days.
Crossbred wools and cardings were solid, without the extreme movements seen in the Merino fleece and skirtings.
Crossbred wool prices are slowly increasing, as some buyers search for value or defensive stocks.
But due to recent lamb forwards being published at 880c/kg, growers of crossbred wool will be prepared to ride it out.
In a market that was expected to be firm, and at a time of year where mills have completed most of the current season's purchasing, everyone was a little perplexed at the strength of the market - especially those sitting in Europe.
They are more focused in the short-term on the approaching summer holidays than buying raw material "out of season".
Nevertheless, some commentary in China suggests there could be further upside for the market in the coming four weeks, before the winter recess kicks in.
Despite the continued uncertainties around the world, the wool market has bounced back remarkably well - in terms of price and quantities consumed, or at least shipped, from Australia.
It will be several months before we get any real meaningful data about garment consumption.
But, in terms of exports of greasy wool, the numbers are a big improvement on levels of last year.
With this selling season stretching into Week 53 due to one of those anomalies of the calendar, the volume shipped from our shores compared to the COVID-19-constrained selling and shipping, 2019 season will be about 20 per cent higher.
That is not to say that we have produced 20 per cent more wool.
But a fair swag of it was not offered last year and has found its way on to the market and into new owners' hands this year by comparison.
Whether the market can, or is actually, absorbing, processing and selling garments from this increase remains to be seen.
But at present there doesn't seem to be too many problems, and stocks are under control.
So, the market is running far longer and far harder than many expected this year - and the futures market is not indicating more than a mild easing after the recess as the spring flush hits the market.
But the wool market often surprises us and we have seen, all year, a correction follows immediately after a boom in prices as traders - particularly in China - pull back in response to a rapid rise.
The wool price increase last week in US Dollar terms was not overly big, but the cumulative effect of the past six weeks is beginning to add-up.
So, a correction prior to the winter recess would not be totally unexpected.
But for Australian growers, it will probably be more about the currency than the underlying wool market.
Last week's currency movements were very positive for the export fraternity, and it had been building for some time. So, the magnitude was quite large.
For some months, the money markets have been speculating that inflation was increasing - or would soon increase - and trigger a reversal of policy from bankers and interest rates.
Suddenly on Thursday morning our time, we saw the infamous dot plot released after the US Federal Reserve meeting.
The dot plot is released after each Federal Open Market Committee (FOMC) meeting and indicates where each of the 18 officials see interest rate movements in the coming couple of years.
Market traders, bored with flat curves on interest rate spreads, have been hanging out for a change of sentiment.
They finally got something to trade on, with 13 of 18 officials favouring at least one interest rate increase by the end of 2023.
This is still a long way off, but markets trade on sentiment and so the currency markets were off.
The US Dollar rose immediately and pushed the value of the Australian Dollar lower, kick-starting another strong day in the wool auction rooms.
By the end of the week, the currency had fallen from US0.77 at the start, to its low point of US 0.7480.
This has allowed exporters to continue selling well after the close of auctions, if they dare.
So, the Federal Reserve Chairman - just by acknowledging that it is now "talking-about-talking-about" tapering the Fed's $120 billion-a-month asset buying program has done what the currency traders have been yearning for - for months.
This boost, along with other factors such as the European Union recommending member states let in US tourists for the first time in more than a year, and curfews relaxing in other parts of the world may be enough to boost consumer activity in coming months to clear away the garments that have just been made.
There are plenty of nervous manufacturers in China, and elsewhere, hoping that all the investments they have made into woollen clothing this year is reflected in their cash balances at the end of the calendar year.
So, as the market rises further, the pressure builds on everyone along the pipeline.
We may see a burst of steam released to relieve some of the pressure, or we may just push on cautiously.
But either way, it is a much better scenario than we were facing at this time last year.
