Prices obtained by local wool producers since China's recent lifting of a ban on SA wool imports have been satisfactory, says Leon de Beer, CEO of the National Wool Growers Association of SA (NWGA).
Last week's auction in Gqeberha, the first after the Chinese ban was lifted, showed prices up 6.8% for uncertified and 7.7% for certified wool.
Prices for SA wool at the latest auction on Wednesday were down by 3.3% for uncertified wool and 6.3% for certified wool, mainly due to some logistics challenges.
The value of wool produced in SA is around R5 billion per annum. Usually, between 70% and 80% is exported to China. In April this year, China imposed an import ban following outbreaks of foot-and-mouth disease (FMD) in parts of SA.
"The market reacted quite well to the lifting of the Chinese ban. Currently, we just have some logistics problems due to wool purchased when the ban was implemented in April and then had to be stored. There is also a challenge with ships and containers for international freight. Once that is solved, our wool exports will flow better," says De Beer.
There was a sharp fall in prices at the first of SA's new wool auctions for the 2022/23 season in Gqeberha in mid-August, before the lifting of the ban. Prices (in US dollar) were almost 12% down at that auction compared to the last auction of the previous season in June this year. The wool marketing season runs from July to the end of June the following year.
But De Beer regards the prices obtained this week as satisfactory.
"The market is stable, and small-scale producers will soon enter the market as the shearing season is about to start. If the Chinese ban was not lifted, it would have become increasingly difficult as more and more wool would have built up," he says.
"At this stage, though, we are satisfied. The market usually goes up and down during the season, often due to the exchange rate. But I think farmers can be satisfied with the prices they are currently getting."