After an exceptional season, the wool industry is set for another exceptional sales year, with early-season production attracting strong demand and record prices.
Port Elizabeth-based Cape Wools SA, which manages the country’s weekly bulk auction of wool – the majority of which is destined for international markets – said yesterday buyers had paid record prices for the second week running, breaking the R200/kg resistance level.
These prices were realised against average prices of between R100 and R180 a kilogram for the 2016-17 season, which was considered an outstanding season and one of the best in decades.
“The wool market delivered excellent returns with equal contributions from a weakening rand and excellent demand for good quality long wool,” Cape Wools SA said after this week’s auction.
“Prices increased across the board, with the fine to coarser ends benefiting.”
It also said the auction came during a week which saw the rand at R14.13 to the dollar and R16.44 to the euro.
Cape Wools SA chief executive Louis de Beer said expectations were that the industry was poised to field yet another good season.
“There are lots of factors in our favour, including the exchange rate,” he said.
“But much more exciting is the growing demand for wool.
“Against this, two exciting issues stand out, the first of which is that the demand is consumer-driven.
“In first-world markets and particularly in Europe, with Italy being one example, people are looking for sustainable fashion with green credentials. Wool delivers this.”
The second positive element was that global wool production was at record lows.
“This brings two factors to the fore,” De Beer said.
“There is increased demand, which has a positive influence on pricing.
“Secondly, there is a significant market gap which translates into great opportunities to increase production and supply.
“Returns on wool sheep farming are excellent.”
Wool prices had seen an increase of around 20% over the past two years, De Beer said.
The country was well placed and well equipped to handle increases in production, with all the necessary infrastructure in place to manage this.
National Woolgrowers’ Association of South Africa general manager Leon de Beer said yesterday expectations of yet another exceptional season were high.
“We have certainly enjoyed a fantastic start to the new season, and indications are that the industry will perform well going forward,” he said.
This came despite some parts of the country, and particularly the southern regions in the Cape, still struggling with drought.
The drought, which strongly influenced sheep foraging and costs for farmers, also played a strong role in the quality of wool produced.
“However, the demand is very good, the exchange rate is very favourable, and South Africa produces top-quality wool,” De Beer said.