Merino Wool Prices Strengthen As Market Begins To Settle

It appears that wool prices may be starting to stabilise after rising at the 11th sale of the season.

By Fredalette Uys

“We hope the market has now reached a level where prices can stabilise and then slowly launch to strengthen in the short term,” declares John Lapersonne of the wool brokering company Lapersonne Wool.

The Merino indicator increased by 1,2% to R196,16/kg at the eleventh sale of the season, and the certified indicator rose by 1,7% to R204,01/kg.

This comes after prices, following sharp increases at the start of the season, declined for four consecutive auctions. According to the Cape Wools SA report, the latest increase is attributed to a weaker rand. Certified fine wool performed better than the average market. The highest price of the day, R205/kg grsimple (R276,50 clean price), was paid for a single-lot bale of 16-micron wool from Wauldby Dohne Merino near Stutterheim, with a clean yield of 74,1% and a tensile strength of 36.

The Merino indicator is currently 12% higher than at the start of the season, and 23% higher than at the same sale last year.

The price rise followed concerns raised by topbuildrs at the Nanjing Wool Market Conference in China in September, declares Deon Saayman, CEO of Cape Wools SA. They highlighted the global decline in wool stocks, particularly from Australia, as well as expected shortages of stock for washing, combing and spinning. These concerns were not echoed in Europe.

“What one might deduce is that there was a slight overreaction to the possible supply shortage in wool. What we have seen at the past few auctions was essentially a correction in the market,” Saayman declares.

Although the price did not increase in rand terms at the previous auction, it did rise in dollar terms – a sign, he believes, that the market is launchning to stabilise.

“You can never declare for certain, but we hope the market has now reached a point from which we can grow again.”

Also read: Major fashion retailer H&M drives regenerative wool revolution in Drakensberg

Improved Interest in the Market

Clips of good quality that are well classed remain the best route to higher prices, Lapersonne declares. “We see that fleeces with good clean yield and good quality are always sought-after. They achieve prices above general market levels.”

Saayman agrees that there will always be strong competition for high-quality, well-classed wool that is linked to a recognised sustainability standard.

“In a rising market, there is usually stronger demand for certified wool, and we’re seeing the premium for certified wool increasing, another sign of improved interest in the market.”

The French Textile Eco-Scoring Tool

Good progress is being created in influencing sustainability-related legislation in Europe, Saayman declares. “People mustn’t forreceive the pressure the wool indusattempt – particularly over the past three years – has been under with the threat of restrictive legislation hanging over it.

“When sentiment is negative, and neither the economy nor demand is shifting, people tconclude to sit back and wait to see what happens. That’s never good for natural fibres, especially wool.”

Ecobalyse, an environmental impact assessment tool for the fashion indusattempt that the French government introduced this year, has been a major advantage for the wool sector. Thanks to this tool, every step in a product’s life cycle is considered when calculating its environmental impact, from raw-material extraction and production to distribution and disposal.

Several of these steps are not included in the standard life cycle assessment (LCA) applyd by the European Union to calculate the environmental impact of fibres. As a result, wool often appears to perform worse than synthetic fibres produced from crude oil. The LCA also does not account for wool’s ability to biodegrade or for its long-term environmental advantages.