Table of Contents

 

1. Overview

The different grades of wool mean it has many uses, from the very soft fibres that can be worn against the skin, to the coarse fibres with uses like insulation and stuffing.

  1. Around 80% of wool is used to make garment products (sweaters, clothes, coats, hats), blankets and carpets. Wool is also highly flame resistant and so is frequently used for mattress and rug manufacturing. Other products include water proofing outer garments and sound proofing applications, Musicians might be interested to know that the piano’s distinct sound (compared to a harpsichord, for example) is a result of wool. The wool fibre is used to muffle the impact of the hammers on the strings.
  2. Products made from wool are durable, flexible and can keep their appearance for a longer period than other fabrics.

The wool market can be divided into three broad product segments based on mean fibre diameter:

  • Fine wools (<19,5µ) are used in luxury products. Prices are rather volatile and poor quality (e.g. as a result of drought) suffers significant penalties on price. Fashion trends and consumer demand for soft, light products for next to the skin wear are and will remain the key drivers in this segment. The finer end of this segment competes with other products e.g. cashmere.
  • Medium wools are usually in the 20-25µ category and are used essentially in the classical menswear, womenswear and knitwear product sectors. Probably the major offtake of wool in this product sector is in blends with synthetic fibres to target lower price points at retail, and in some cases to achieve certain technical effects. Prices in this category are particularly sensitive to competition from synthetics.
  • Strong (coarse) wools (>26µ) are mainly used for interior textiles such as furnishings, carpets and bedding products.
 Source: DAFF-NAMC International TradeProbe, Issue No 55, January 2015; DAFF's Wool Market Value Chain Profile; Cape Wools SA

 

2. International business environment

Find updates on www.capewools.co.za.

  • The global price for apparel wool is determined in Australia, the world’s largest supplier of apparel wool, where the largest volumes of wool are traded. South Africa, with its small clip, is therefore a market follower or price taker.
  • At consumer level, wool as a textile fibre is a non-essential product and to some extent a luxury fibre. Economic growth in key consumer markets, consumer confidence and spending patterns, therefore, affect wool pipeline demand. Factors affecting prices are exchange rate movements, supply and demand in consumer markets, the relative price for wool compared with other fibres, and fashion trends.
  • Top wool producing countries are Australia, China, USA, New Zealand and Argentina. Turkey, Iran, UK, India, Sudan and South Africa follow.
  • South Africa is a full member of the International Wool Textile Organisation (IWTO). Visit the IWTO website – www.iwto.org. Find global information and statistics on the website.

South Africa: imports and exports

The Wool Market Value Chain Profile (see heading 9) takes a close look at exports and imports.

  • Despite being a net importer of sheep meat, more than 90% of the wool produced in South Africa is exported, allowing it to be the third largest exporter of wool (by value) in the world in 2017.
  • China represents the biggest market for South African wool exports. After Australia, South Africa represents the second largest exporter into China.
  • Over the past decade, South Africa has increased its market share in China, supplying 10.4% of the total value of Chinese imports in 2017, from merely 4% in 2007.
  • The value of South African exports has increased by more than 12% per year between 2007 and 2017, a true success story within South African agriculture.
Source: Bureau for Food and Agricultural Policy (BFAP) Baseline 2018-2027 p 72

 

3. Local business environment

Cape Wools SA supplies an SMS message service supplying market information directly after sales, as well as a weekly market report via e-mail. This information can also be found on its website, www.capewools.co.za.

  • The sheep and wool industry is one of the oldest agricultural industries in South Africa. As a largely export commodity it plays an important economic role as an earner of foreign exchange for the country.
  • Prior to 1994, the Cape Province was the most important wool producing area in Southern Africa. “Cape Wool” became the international generic trade term for all wool produced on the sub-continent. Today, the main production areas are in the Free State and Eastern Cape. Other high producing provinces are the Western Cape, Northern Cape, Mpumalanga and KwaZulu-Natal. Find the latest production statistics on www.capewools.co.za which sets out wool production per province and magisterial district.
  • The main sheep breeds used for wool production are the pure-bred Merino followed by other dual-purpose Merino strains (Dohne Merino, South African Mutton Merino and the Letelle).
  • Cape wools are traded either through the auction system or by private treaty. The largest percentage of the clip is sold through the auction system. Auctions have been centralised in Port Elizabeth and take place once a week during the season (August to June). Even though centrally auctioned, wools are warehoused in three of the four ports: Port Elizabeth, Cape Town and Durban.
  • Prices paid for Cape wools are determined by free market supply and demand forces and are closely linked to the international price for apparel wool, which is determined by the Australian market.
  • Most of the clip is marketed overseas through members of SAWAMBA. Only registered members of that organisation are allowed to bid at auctions held under the auspices of the South African Wool Exchange.
Source: Cape Wools marketing brochure available on www.capewools.co.za and DAFF's Wool Market Value Chain Profile.

 

5,42 million kilogrammes of wool with the value of R383,6 million was produced in the 2017/18 year (NWGA, 2018).