THE Eastern Cape, South Africa's largest wool-producing region, is set to experience a bumper trading season, with the first auction for the year taking place today.
With the wool trading season only halfway through, indications are that the market is set to grow, after closing on a high note before the festive recess when the Cape Wools market indicator reached an all-time high of R109,91/kg of clean wool.
Cape Wools spokeswoman Ona Viljoen said this was about 26% higher than at the season's opening sale in mid-August last year and the increase was mainly thanks to an increase in demand from China, the region's biggest importer of apparel wool.
Viljoen explained the Eastern Cape was South Africa's largest wool-producing region, producing 31% of the total. South Africa is in turn the second largest wool producer after Australia.
Last season – between mid-August and mid-June – South Africa produced 44.8-million kilograms of wool of which the Eastern Cape contributed just under 14-million.
The Eastern Cape's Barkly East district tops the list followed by the Free State, Western Cape and the Northern Cape.
Last season's sales is a massive improvement after the industry suffered a major blow over the past two years when Rift Valley Fever (RVF) broke out, causing large-scale livestock deaths. Production took a dive of about 4.5%.
About 98% of South Africa's wool is exported – mostly to China, the Czech Republic, Italy, India, France, Germany and the United Kingdom. New on the list of importers is Egypt after establishing a processing plant recently.
Viljoen said the economies of these countries played a major role in determining the price of wool.
"If the economies of these wool- consuming countries suffer, the industry suffers as clothing is a non-essential item," Viljoen said.
Other factors that influenced the wool industry included fashion trends and demand and supply.
Most of the wool leaving South Africa is Merino wool used in textiles.
Port Elizabeth is the central hub for the wool trade in South Africa.
Viljoen said after a farmer had shorn his or her sheep, the wool is dispatched to Port Elizabeth where it is sold through an auction system at the South African Wool and Mohair Exchange in Grahamstown Road.
A wool broker then handles the wool on the farmer's behalf and prepares it for auction. This involves taking various samples of the clip.
A large sample is taken for display purposes to enable prospective buyers to physically inspect it for subjective characteristics such as softness and handle, while core samples are taken for testing purposes.
The clip is tested and certified by the Wool Testing Bureau of South Africa in Summerstrand for fibre diameter (micron), vegetable matter content and clean yield.
A certificate is then issued by the bureau which is accepted all over the world. The wool is then sold on auction every Wednesday and thereafter the wool brokers ensure each bale is sent to a high-density press, loaded into containers and exported.
The brokers then take commission and pay the farmers.