Australia's wool market is expected to get a leg up from the suspension of wool exports from South Africa to China due to an outbreak of foot and mouth disease in three provinces.
An immediate impact of the South African situation will be a void of wool accredited with the Responsible Wool Standard, according to Independent Commodity Services analyst Andrew Woods, who reported exporters would have to scour Australia for supply.
Trade was suspended in South Africa last week with the peak wool body, Cape Wools SA, releasing a statement saying exports could resume only once several new measures were implemented as required by China.
The Eastern Market Indicator is currently 1369 cents a kilogram - 69c/kg higher than the same time last year.
In 2019, China enforced a similar ban that lasted eight months, heavily impacting the country's wool industry, which, like Australia, exports 80pc of its wool to China.
But poor quality wools as a result of seasonal conditions capped any major responses by European buyers in Australia last week.
"In our domestic market quality remains an issue in terms of vegetable matter levels and the effects of a wet summer," Mr Woods said.
"Quality systems are all well and good but fundamentally wool needs to be firstly fit for purpose."
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Elders Victorian wool manager Lachie Brown said while there would be opportunities for Australia with the absence of South African wool, several supply-chain challenges would cap any significant price rises.
"With up to 40-50pc of South African wool RWS accredited now, that is a sizable reduction of worldwide supply of those wools so if buyers are looking for those types, they will have to look to Australia," Mr Brown said.
"But there are a number of variables keeping a lid on prices, with the key factor being shipping delays and the financial implications to buyers, which is still prevalent and getting worse.
"In addition to this, COVID is still a major issue in China with potential for lockdown of processing and ports, as well as the situation in Ukraine, means there are multiple real and perceived limiting factors when it comes to demand and prices.
"If you are producing wool in the next six to eight months, assess forward contracting as a possibility based on the number of risks out there."
Annabelle Cleeland
Annabelle Cleeland is a Stock & Land journalist. She has worked at Australian Community Media for more than a decade serving in a number of roles including editor, senior journalist and national sheep & wool writer. She runs a fine Merino wool property with her young family in North-East Victoria.
Annabelle Cleeland is a Stock & Land journalist. She has worked at Australian Community Media for more than a decade serving in a number of roles including editor, senior journalist and national sheep & wool writer. She runs a fine Merino wool property with her young family in North-East Victoria.
