Australia's greasy wool market appears stable as the country's benchmark Eastern market Indicator (EMI) improved for the forth consecutive week last series, up 1.9 per cent to 1427 cents per kilogram.
Even crossbred wools had their biggest lift in a long time, rising between 10 to 30c.
However analysts have warned a slowing EMI is on the horizon on the back of inflation "spinning out of control".
And the market can no longer depend on demand outweighing supply.
"Although demand for Merino wool is reasonable, it is nowhere as good as the Australian dollar prices portray," Independent Commodity Analysts' Andrew Woods said.
"In local terms, the firmer prices were in large part a function of the lower Australian dollar - down 1.6 per cent against the US dollar,"
"In the economic background, conditions continue to deteriorate, with prospects of demand weakening in the new season."
A big driver of trends is the global economy and in particular the higher-end consumer spending in mid to high-wealth countries, but supply is nearly always one of the most important dynamics for the wool market.
Mecardo's managing director Robert Herrmann said history shows a lack of supply can directly improve prices, but wool now faces increased competition in the market space.
"The price of wool has certainly been supported by a reduction in supply in recent times," Mr Herrmann said.
"But the shortfall in supply in the Australian Merino market will be met by something else and over time the price will then realign with competing fibres.
"It is a sobering factor to keep in mind that we are not going to continually see prices improve on the back of reduction in wool supply."
Rabobank's agricultural analyst for wool Dennis Voznesenski said the EMI will also be dampened by strict Chinese lockdowns, on top of inflation and rising interest rates.
And he said the "sugar hit" to retail apparel sales from accumulated savings during Covid-19 is expected to cease by year end.
"Not only are interest rates expected to reduce disposable income for consumers, but so is increasingly high inflation," Mr Voznesenski said.
"US inflation hit 8.5 per cent in March - the highest since 1981.
"The more inflation increases, particularly food price inflation, the less disposable income is left for other less critical goods and these are things like apparel, and particularly woollen apparel."
He said the expected result is the EMI trading between 1300c/kg and 1400c/kg for the remainder of 2022, down from the predicted 1350c/kg to 1500c/kg last month.
And Chinese consumer confidence is expected to experience a hit by mid-year before recovering as lockdown measures are eased.
"While we do not expect to see a full 10pc drop seen between January 2020 and June 2020, part of that drop will be experienced," Mr Voznesenski said.
"The main drivers will be strict lockdowns in addition to an expected slowing of global economic growth."
On top of this the impact of logistical constraints for processing will compound reduced domestic demand for apparel and Chinese wool imports for 2022 are expected to drop by 5 to 10pc year-on-year.
But he said stronger demand outside of China should drive the Chinese government to keep manufacturing running where possible through the lockdowns.
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