Prices of wool touch new lows

16 Oct '08

2 min read

Wool prices declined for a second week in a row on the back of the uncertainty caused by the turmoil in global financial markets, and Cape Wools' Merino indicator finished the day 5,1% softer at R49,18/kg (clean).

This was the first time since December 2006 for the indicator to fall to below the key R50/kg level. Although the average indicator for the season to date is 14% down year-on-year, it still is 10% higher than the average indicator for the 2007/08 season.

Buyers report a sharp decline in orders since clients are reluctant to buy in the current economic climate and unstable currencies. In Australia, the market indicator fell 2,2%.

Unlike last Wednesday, the rand was fairly stable during the morning, trading at R9,15 to the US dollar at mid-morning. At R12,47, it was largely unchanged against the euro compared with last Wednesday's exchange rate.

Prices were lower across the board. In the long Merino wool category, the broader end of the market, particularly 22 microns and 23 microns, was the most affected, declining by
over 6%.

The offering comprised 6 171 bales of which 86% was sold. Major buyers were Modiano (1 216 bales); Standard Wool SA (1 016 bales); Stucken (973 bales), and Chargeurs Wool (784 bales).

Average price movements for AWEX-type fleeces MF4 and MF5 of 70 and 80 mm were as follows: 19 microns were down 1,9% to R65,49/kg, 20 microns fell 4,9% to R53,80/kg; 21 microns were 4,5% softer at R50,14/kg; 22 microns declined by 6,3% to R48,03/kg, and 23 microns were 6,6% cheaper at R46,24/kg. There were no quotes for 24 and 25 microns.

Approximately 10,500 bales have been rostered for next week's sale.

capewools