THE first wool auction for the year will take place in Port Elizabeth tomorrow, with more than 15000 bales on offer.
The market closed on a high note before the festive season recess when the Cape Wools market indicator reached an all-time high of R109.91/kg, sparked by strong demand from China. This was also 26% higher than at the season's opening sale in mid-August.
With recent data signalling an improvement in the Chinese economy as factory output and retail sales increase, wool prices are expected to remain strong this year.
In addition, concerns over the fiscal cliff in the US have been allayed for now, which might further improve business sentiment.
According to industry insiders, wool production is on the rebound following the devastating effect of Rift Valley Fever (RVF).
The volume of wool received into brokers' store from July to December last year was up 4.5% compared to the same period in 2011.