China ban sees low clearance at 28th sale of the season

Despite China’s ban on wool and mohair from South Africa following several foot-and-mouth disease outbreaks across the country, the 28th wool sale of the season went ahead, with a small volume of 4 859 bales on offer, according to Cape Wools SA. A sales clearance of 61% was achieved.

China is the biggest buyer of South Africa’s wool and mohair, and unfortunately, the ban remained in place at the time of going to print.

Jacques le Roux, general manager of wool and mohair at OVK, said the wool industry was in regular contact with the Department of Agriculture, Land Reform and Rural Development to assist in finding a speedy solution to the ban.

“But it is impossible to predict when this will happen, so we are preparing to see the season out with the ban still in place,” he added. “While the situation is very uncertain and will be assessed weekly, we will endeavour to hold auctions regularly. It is our responsibility to safeguard our industry, which includes maintaining market-related prices. We will therefore apply a strict reserve price policy at the auctions.”

To encourage buyers to participate in the auctions, OVK was offering extended payment terms and free storage. This would assist buyers in overcoming cash-flow problems as a result of the ban. Producers whose wool was not sold would be assisted with an advance on any wool delivered of up to 80% of the value of the wool.

Despite the shorter carding wools experiencing downward pressure, the overall market remained unchanged in rand terms due to the strong performance of longer combing wools, of which nearly 80% was sold.

The Australian market was in recess during the corresponding week. However, the market experienced a slight easing of 0,2% in dollar terms compared with the previous week. – Roelof Bezuidenhout