WOOL is rebounding. The market was set to gain significantly this week after a five per cent lift in futures prices last Friday and very solid gains across the trade last week.
'With no auction sales and no change to the Australian dollar, it was amazing to see the futures market trade at about a 70 cent premium to the spot market late last week," a bullish Platinum Agribusiness principal Bill Mitchell said this week.
"Demand and wool prices have held up relatively well considering the financial crisis.
"Historically wool is amongst the first commodities to fall in a recession but also amongst the first to lift so let's hope this is the case here.
"It has a long way to go but this is a start."
His thoughts have been echoed by Landmark NSW wool manager, Chris McDonnell.
"Everyone who I have been speaking to in the trade is feeling a lot more positive, there is real demand for wool after a period of great uncertainty," Mr McDonnell said.
Last week wool sales resumed on a positive note with strong gains across all Merino microns pushing the eastern market indicator (EMI) up 23 cents to 790c/kg (clean).
An indication the gain was due to real demand was the 3.5pc gain in US-dollar terms, and the 5pc pass in rate for the 58,000 bales offered also suggests growers were a little happier with the new levels.
Last week 17-micron wools rose 50 and 36 cents in the north and southern markets to finish at 1357c/kg and 1369c/kg respectively, while 19-micron wools are fast closing in on the $10 per kilogram mark, up 47c to 984c/kg in Sydney, 33c in Melbourne to 992c/kg and 19c to 955c/kg in the west.
Broader Merino microns also had a good week as 21 to 23 micron wools commonly lifted 20c across the market, the 21 micron gauge rose 23c in Sydney to 765c/kg and 21c in Melbourne to 767c/kg.
"The market is still being driven by Chinese players, stocks there are dwindling and from what we understand the domestic demand for wool in China has remained solid this year," Mr McDonnell said.
However, he suggested wool prices still had a long way to lift before growers lifted their production and people were enticed back into wool.
"The cost of production is still a killer, prices have a long way to lift before people get too excited but it is nice to see some good news for wool," he said.
There are 43,000 bales rostered for sale across three selling centres this week.