DESPITE the benchmark Eastern Market Indicator losing 12c/kg since the opening week of sales this year, the wool market is holding strong.
This trend is set to continue for the rest of the 2012-13 season, when the EMI is forecast to close at 1130c/kg, according to NAB's latest analysis of the wool market.
While prices are back compared to this time last year when the EMI was at 1194c/kg, the volatility of the world economy and the high Australia dollar, growers and brokers aren't complaining.
The EMI opened stronger this year at 1111c/kg.
However, last week it dipped back to 1099c/kg.
While all microns made gains of between 30c-60c/kg in the opening week of sales, most have dropped back each week since.
Although fine wools from 16 to 17.5-micron have been volatile, they have mostly recorded gains, with the 17-micron southern market indicator at 1444c/kg - up 9c/kg on last week.
The wool market has continued to firm since last September, when the EMI was at a low of 942c/kg, with the December prices reflecting a 13.5 per cent increase.
NAB agribusiness general manager Khan Horne said the recent price bounce reflected domestic supply and wider economic conditions.
"Hot and dry weather across the country has somewhat diminished Merino wool supply over recent months. However, Australian wool production remains set for fairly modest growth, with relatively stronger growth expected for finer micron wools," Mr Horne said.
While the overall volume of wool imported by China declined last year, Chinese buyers have come out strong this year.
According to last week's Landmark wool market report, clothing retail sales for January in the US, the UK, Japan and China have been positive. "If this continues for the rest of the autumn/winter then orders for 2013 autumn/winter could be better than expected and could help sustain a rally in wool prices into the first half of 2013," the report says.
Meat and Livestock Australia's industry projections released last week also quoted the wool market as positive.