The new wool season is about to open amid speculation about how the slower global economic growth will affect consumer demand for clothing, according to Ona Viljoen of Cape Wools. Exchange rates will continue to play a major part in determining price levels in the new season. “Australia, where auctions have already started, the market initially lost some ground, but last week recouped its losses, mainly as a result of a weaker Australian dollar,” she said.
Analysts hope that the sharp decline in the production of apparel wool will counterbalance a possible decline in demand at retail level. Global production is expected to fall by 7% year on year. S A was the only one of the four major wool exporting countries to post an increase in production last year. “Good climatic conditions in most wool-growing areas contributed to the 3,6% increase in local production to around 48,6 million kilograms,” said Viljoen. “In the other three exporting countries – Australia, Argentina and Uruguay – production was down on the previous season and is expected to fall further this season.”
Production in Australia, the world’s largest apparel wool producer, dropped by around 12% over the past season and is expected to decline a further 7% to 385 million kilgrams – its lowest level in 60 years. “The primary cause is the high global grain prices that have been a strong incentive for farmers to plant additional winter crops, reducing the area for sheep grazing, and the continuing dry conditions in some parts of eastern Australia and Tasmania,” Viljoen explained. Poor seasonal conditions in South America are to blame for the decline in sheep numbers there.
Patagonia, the main Merino wool production area in Argentina, has experienced a prolonged drought and production is expected to fall 8%. has also been experiencing poor seasonal conditions, resulting in a smaller lamb crop. Production there is expected to drop 5%. – Roelof Bezuidenhout
