The 2012/13 wool season opens on Wednesday (15 August) when approximately 13 000 bales will be on offer at auction in Port Elizabeth. The season opens amid uncertainty caused by the crisis in the euro zone, which will have a dampening effect on prices. In Australia, where the new season has already commenced, prices have declined sharply. A strong Australian dollar, large offerings at auction and the European holiday contributed to this decline.
The past season has been one of the best in decades with prices rising despite difficult trading conditions. The Cape Wools Merino indicator reached its the highest level ever. The average indicator was 37% higher than last season’s average.
Local buyers expect prices to remain relatively stable, although the market may weaken initially and then stabilize. Exchange rates will also play a role.
In total, 289 689 bales were offered at auction and a 100% clearance rate was recorded. The total sales value amounted to R2,27 billion, an increase of 36% compared with the previous season.
Prices were to a large degree supported by the low world offering of apparel wool, which has fallen to its lowest level in 60 years.
Although trading conditions are expected to remain difficult, analysts expect continuous low production to support prices to some degree.
The offering from Australia, the world’s largest supplier of apparel wool, is expected to remain unchanged at 345 million kg, while production in South Africa, the second largest supplier, has declined by 4% to 44,2 million kg.
China remained the largest importer of South African wool, taking up 48% of the total value of wool exported. The second largest importer was the Czech Republic, followed by India and Italy.
Cape Wools chairman Geoff Kingwill has appealed to wool producers to adhere strictly to the guidelines for the preparation and packing of wool and prevent contamination.