While the news has been dominated by persistently high cotton prices, wool prices have followed suit, remaining in the ascendent. According to the Cape Wools Merino indicator, wool jumped 12.9% from the start of the season, closing at R115.12/kg.
South Africa is a major producer of wool, especially in the Eastern Cape. The majority of this wool is sold at weekly auctions between the months of August and June. Historically a volatile commodity, a varied basket of factors contribute to determining the ultimate price of wool including exchange rate fluctuations, varying demand for different types of wool, futures speculation, and the strength of the Australian market.
The rising price of wool today is at least partly attributable to a weakened rand against the US dollar, trading 2.4% lower than last week, and 2.7% lower against the Euro.