Wool season opens on Wednesday‚ faces uncertainty

The season opens amid uncertainty caused by the crisis in the eurozone‚ which is expected to have a damping effect on prices.

In Australia‚ where the new season has already begun‚ prices have declined sharply.

A strong Australian dollar‚ large offerings at auction and the annual European holiday season have contributed to this decline.

The 2011-12 season was one of the best in decades‚ with prices rising despite difficult trading conditions. The Cape Wools Merino indicator reached its highest level on record and the average indicator was 37% higher than the previous season's average.

In total‚ 289‚689 bales were offered at auction and a 100% clearance rate was recorded in 2011-12. The total sales value amounted to R2.27bn‚ an increase of 36% compared with the previous season.

Prices were to a large degree supported by the low world offering of apparel wool‚ which has fallen to its lowest level in 60 years.

Local buyers expect prices to remain relatively stable this season‚ although the market may weaken initially before stabilising. Exchange rates will also play a role.

Although trading conditions are expected to remain difficult‚ analysts expect continuous low production to support prices to some degree.

The offering from Australia‚ the world's largest supplier of apparel wool‚ is expected to remain unchanged at 345 million kilograms‚ while production for the 2012-13 season in SA‚ the second-largest supplier‚ has declined by 4% to 44.2 million kilograms.

China remained the largest importer of South African wool in 2011-12‚ taking up 48% of the total value of wool exported. The second largest importer was the Czech Republic‚ followed by India and Italy.

According to local exporters who have just returned from China‚ clients have expressed concern about the high level of contamination by non-wool fibres in the South African clip. Some are even considering reducing their imports.

Polypropylene bale partitions still used by some farmers remain a serious problem. According to the guidelines of the Code of Practice for Clip Preparation‚ only paper partitions may be used since these do not contaminate the wool.

Cape Wools chairman Geoff Kingwill and exporters have appealed to wool producers to prevent contamination at all levels and to adhere strictly to the guidelines for the preparation and packing of wool.