The global financial crisis and recession fears are continuing to influence the wool market negatively and the Merino indicator this week declined by 4,2% to Rr47,13/kg (clean), according to Oona Viljoen of Cape Wools.“Orders from overseas clients are tapering off in the wake of reports of an expected major slowdown in economic growth in the Eeuro-zone in 2009 and lower sales figures at retail level as shoppers cut back on clothing purchases,” explained Viljoen. “Nnot even the weaker rand, which was down 19% against the USs dollar compared with the previous week’s exchange rates, was able to give much support to the market in terms of local prices. Iit had also weakened by 12,6% against the euro. Australia, the indicator fell just over 7%.”
Ken Craig of BKB said the Merino wool indicator is now 23% lower compared to sales a year ago, while the rand has depreciated by 59% against the USs dollar over the same period. Wool prices in US dollar terms are 48% lower over the comparative period, but there is consensus that the market, in South Africa at least, has bottomed out and industry roleplayers generally agree a “new level” has been found.
“In addition, the quality of fresh, spring Merino wool coming onto the market is excellent, despite drier conditions,” said Ccraig. “However, year-on-year, fresh wool supplies to date are around 5% off, which is a concern. This can be attributed to farmers relieving their properties of excess stock in an effort to conserve grazing. Iife spring rains and more importantly, prices improve, supply levels will most likely increase.” – Roelof Bezuidenhout