South African Wool Prices Fall after China Ban

South African raw-wool prices fell at a sale this week and may be depressed this season after China, its largest customer, restricted imports from the country because of an outbreak of Rift Valley Fever, Cape Wools SA said.

"There will be less competition on the auctions," Geoff Kingwill, chairman of the non-profit industry group, said. "We're expecting our market to be depressed compared with international markets."

South Africa, the world's largest exporter of wool used to make clothing after Australia, halted exports to China from all regions because the government couldn't guarantee products came from areas free of Rift Valley Fever, Cape Wools said yesterday, citing a government statement.

While China is a signatory to a World Organization for Animal Health protocol that stipulates that wool imports aren't subject to Rift Valley Fever curbs, the country still stops imports from affected areas, according to Cape Wools. China accounted for 57 percent of South Africa's wool export sales in the last season. Rift Valley Fever can kill animals and infect humans through contact with blood or organs of infected animals, according to the World Health Organization.

Raw-wool sale volumes aren't expected to decline this season as South Africa is likely to increase scouring, or processing, of wool, Kingwill said, adding that scoured wool can still be exported to China. South Africa may also boost raw-wool sales to India, the Czech Republic and Slovakia, he said.

Further talks are planned to try to reassure the Chinese government that the exports pose no threat, Kingwill said. "There is a chance this ban won't be there for the whole season," he added. South Africa's wool industry supports as many as 18,000 farmers who have combined flocks of 14 million sheep and produce about 50 million kilograms (110 million pounds) of wool annually.

The Rift Valley Fever outbreak was confirmed by laboratory tests on Feb. 18 this year and probably started during the middle of January in the Free State province, according to a Department of Agriculture, Forestry and Fisheries presentation on the Agriculture Business Chamber's Web site. It has caused more than 6,300 animal deaths, mainly among sheep.

Reprinted in part from Bloomberg.com