Wool prices continue to rise and are currently trading at near-record levels, having increased by a notable 44% since the start of the season.
By Fredalette Uys
The Cape Wools Merino indicator rose to its second-highest level of R252,19/kg at the 24th auction of the season. The peak remains R253,82/kg, recorded at the third auction of the 2018–19 season.
This increase comes despite a significant strengthening of the rand since the first auction of the current season. The price increases in 2018 were driven by a weakening rand as well as drought conditions that affected Australian production.
Similar price increases have been observed in Australia since the start of the season. The Australian EMI (Eastern Market Indicator) was 44% higher on 5 March compared with a year ago. Due to ongoing drought conditions, wool production in Australia has declined significantly in recent years, and in February approximately 21% less wool was tested on an annual basis.
Australia’s shearing output has declined by almost the equivalent of South Africa’s entire shearing production over the past two years.
According to Deon Saayman, the sharp decline in Australian production has had a substantial impact on the global market, alongside indications of strong demand from China, which continues to support favourable price levels.
The global market is also closely monitoring the potential impact of the war in the Middle East. Saayman notes that there could be short-term disruptions to the shipment of wool to processors. However, it is still too early to predict the possible long-term effects on wool prices.
Also read: Aussie market opening gives strong boost to SA wool prices
Good prices continue
The certified indicator traded at levels similar to the previous auction, declining slightly by 0,4% to R255,54/kg. The corresponding Australian market increased by 1,02% in Australian dollar terms.
A total of 9 108 bales were offered at the auction, with 94,9% of the supply sold.
According to the Cape Wools market report, the offering consisted mainly of long to medium-length fine micron wool, with sustainably certified wool accounting for 58,8% of the supply.
A top price of R330,61/kg (clean yield) was achieved for a lot of three bales of 16,7 microns from the Jordaan family farm in Somerset East in the Eastern Cape. The wool was brokered by Segard Masurel and purchased by Standard Wool SA.
Also read: Cape Wools standard meets Four Paws criteria for animal welfare needs
