Summary of wool sales in South Africa, South America and the UK for week commencing May 5, 2003.

Fall in the Cape

The first wool sale in Port Elizabeth after the Easter recess saw the market falling significantly, after last week’s slide in Australian prices. Cape Wools’ indicator shed 13.1% to finish the day (Wednesday May 7) at R31.09 per kg. clean. It was the single biggest fall in the past two seasons and wiped out most of the price gains of the first half of the season.

Subdued demand in key markets, exacerbated by SARS and its negative effects (particularly on China), and a stronger but volatile rand all brought downward pressure on prices. On top of that, this week’s offering of 12,186 bales was fairly large. Many growers responded to the lower price levels by refusing to sell, resulting in a sales percentage of only 82.7%.

Major buyers were Modiano, Standard Wool SA, Stucken, and Chargeurs.

Mohair ‘depressing’

The sixth summer mohair sale of 2003 in Port Elizabeth on Tuesday (May 6) again showed rather depressing results, with prices of all types under pressure. It could be generally accepted that the ever strengthening South African currency has serious consequences for the South African mohair industry, and that the exchange rate is probably the main cause of present low sales prices despite the influence of non-market related factors.

The competitiveness on the international market of South African processors is under pressure. Organisations abroad are lowering stock levels, in certain cases, rather expensive stock. Stock clearance can only take place if there is demand, and information currently being gathered in Europe indeed points to reasonable demand, given the present economic situation.

Argentine exports

Unilan (4,931 tons clean), Chargeurs (4,893 tons) and Fuhrmann (4,483 tons) were the top three Argentine wool exporters in the first nine months of the present season. Ituzaingo shipped 3,639 tons, Fowler 2,145 tons, Alberto Abdala e Hijos 2,131 tons and Dewavrin 2,077 tons.

Grim outlook

The business outlook in the early-stage processing industry remains “extremely tough” with no sign yet of a turnaround in new orders or production activity, which is needed to support current raw-wool prices, says The Woolmark Company in its May Market Briefing. “Any turnaround in combing will initially be held back by the excess worsted yarn stocks in Western Europe and East Asia and now the growing top stocks in East Asia,” says TWC.

Wool Record - 8/5/2003