The past 12 months have seen wool prices rally to record levels in some cases, or at least high enough to challenge the record highs achieved either during the late 1980s or the early 2000s, Figure 1. In an environment such as this, it can become veryeasy to get caught up in the heat of the moment and lose some perspective when the market is as hot as it was in May-June. The words "this time it's different" tend to be heard more often during such strong rallies.The heavy price falls that occurred when markets resumed following the winter recess are proof-positive of this. Prices for medium and fine Merino wools were the hardest-hit, with the 18-, 19-and 21-micron price guides (MPGs) falling by 30%, 21 %, and 18% from the peaks between March and June to the time of writing this article in early October. What this shows is that markets rarely, if ever, remain at historically-high price levels for long. The probabilities are always in favour of them deterioratingrather than rallying further.
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