SOUTH AFRICA: Weak dollar takes its toll on wool sale

CAPE MOHAIR:  The weakening of the US dollar, resulting in the strengthening of the rand, was the foremost reason for the 2,5% drop in prices at Wednesday‘s Cape Mohair and Wool sale.

The market performed well, with 97% of the offering sold under good competition among all buyers. Robbie Hughes, from the farm Hughenden, Burgersdorp, broke the CMW season record with a lot of BFH 16.1 micron with a price of R84,40, which was bought by New England Wool.

International and local processors are under pressure in building up stocks to feed their mills, whereas greasy exporters are retracting slightly with the expectation that prices could become more competitive.

Enquiries from China were subdued while contracts in the European markets were below the present market levels, CMW said. Cape Wools also saw a softening of 2.6% to close the day at R58, 26/kg (clean). This was still 4% up on the opening level.

The rand, which earlier in the week soared to its highest levels in 17 months against the US dollar but later retreated somewhat, was trading at R6,53 against the US, up 2,1% from last week, and at R9,43 against the euro, a gain of 0,6% compared with last Wednesday. Demand nevertheless remained strong and 97% of the offering of 7 716 bales of mostly average quality was sold.

Long merino fleece wools were cheaper across the board, with 21 microns and 22 microns posting the biggest drops. Major buyers were Segard Masurel (1 532 bales), Modiano (1342 bales), Chargeurs Wool (1313 bales), Standard Wool SA (1189 bales), and Stucken (1 145 bales).

Average price movements for AWEX-type fleeces, MF4 and MF5 of 70 and 80mm were as follows: 19 microns dropped 0,9% to R71,98/kg; 20 microns were down 2,6% at R63,64/kg; 21 microns were 2,7% cheaper at R58,74/kg; 22 microns dropped 3,4% to R56,35/kg; and 23 microns were 2,4% cheaper at R54,93/kg.

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Added: November 4, 2007 Source: Agencies
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