High wool prices expected for next three months

The wool market exceeded all expectations at this week’s sale when Cape Wools’ Merino indicator surged 5,1%, to close at a fresh seasonal high of R69,72/kg (clean). This is up 25% on the opening sale, according to Ona Viljoen of Wools.
“Concern about the supply of quality wools for the remainder of the season appears to have been the main driving force behind the price hike,” she explained. “That there’ll be no sale next week may also have contributed. With the rand regaining most of last week’s losses, the exchange rate played only a minor role. There was brisk demand for all quality wools and prices rose across the board. The offering totalled 9 428 bales, almost 2 000 more than last week, of which 98% changed hands.”
The question now is: where to from here?” Ken Craig of BKB said that for various reasons, prices over the past decades haven’t been rising in line with inflation or other noteworthy statistical measuring tools, but he was of the opinion that current price levels may not be far from what wool prices would have been if they had risen evenly. “Steep rises inevitably result in financial gain on one side and certain losses on the other, and then in an inevitable correction,” he said. “But most of those in the know agree the market is expected to show support at current levels for at least the next three months. After that it becomes a lottery.”
James de Jager of CMW thinks current cold conditions in the northern hemisphere could boost demand for medium micron categories, used in thicker garments. But he added that currency fluctuations will be a decisive indicator of price to the end of the season. “The sought-after CL Greyling and BP Greyling fine wool clip from Wakkerstroom once again set the standard for quality fine wool by obtaining premium prices,” he said. “The top prices were for two Cape Merino lots: a line of AFF, 16,9 micron of CL Greyling which was sold for R80/kg and a line AFFY, 16,5 micron of BP Greyling sold for R72,75/kg.”
According to Wool’s statistics, major buyers were Standard Wool SA (1 858 bales); Modiano (1 719 bales); Chargeurs (1 516 bales); Stucken (1 068 bales), and Lempriere (Aust) Ltd (925 bales). Average price movements for AWEX-type fleeces, MF4 and MF5 of 70mm and 80mm were as follows: 19 microns rose 2,5% at R90,04/kg; 20 microns gained 2,8% at R79,04/kg, and 21 microns were 4,4% dearer at R71,21/kg. There were no quotes for 22, 23, 24 and 25 microns due to insufficient quantities in these categories. – Roelof Bezuidenhout