As the AWEX Eastern Market Indicator (EMI) continues to rise, industry analysts are predicting demand for wool to continue pick up as workers around the world return to the office.
The market has recorded overall positive movements for every sale of this calendar year, rising for five consecutive weeks, adding a total of 91 cents over this period and is now at the highest point so far for the 2021-22 financial year.
Yesterday, the EMI took on another 46c, closing the series at 1449c/kg - the largest weekly increase in the indicator since October last year.
Currently, the EMI is sitting 164 cents higher than the same time last year. The last time the EMI was higher was in June 2021 when it was quoted at 1468c/kg.
And in what is more good news for growers, Rabobank agricultural analyst Dennis Voznesenski said the EMI is expected to trade, on average, between 1350c/kg and 1500c/kg in 2022 - up 7 per cent on the 2021 average with a number of positive factors pushing wool prices higher.
"Firstly, the US retail apparel sales are continuing to grow, with December data showing an 18pc rise versus pre-pandemic levels," Mr Voznesenski said.
"And secondly, the latest woollen suit import data for October 2021 shows a full recovery to pre-pandemic levels in France and only 26pc below pre-pandemic levels in the US."
Mr Voznesenski said these levels reflect a return of office workers - a trend they expect to strengthen throughout 2022.
"Even if we see an interest rate induced slowdown in the world economy this year, we expect the demand for wool from workers returning to offices and buying suits to be the more important variable for wool," he said.
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But Mr Voznesenski said there are some elements in the industry that aren't as positive.
"There has been anecdotal evidence of casualization among Chinese office workers, with more emphasis on business casual and less on suits," he said.
"Whether this is temporary or permanent will determine the micron type and volume required for the domestic Chinese market for the future."
The issue of container shortages continues to be experienced across the commodity spectrum with the pain expected to persist over the next six to 12 months, he said.
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