The WOOL INDUSTRY in URUGUAY

Report to the Market Intelligence Forum, Cairo 2006

INTRODUCTION

During 2005 the economy showed very positive results, with an increase of +6,6% in GDP and +17,8% in total exports, compared to 2004. Inflation rate remained low at 4,9%, while the Uruguayan peso valued 11% against the American dollar.

These positive indicators are the result of a more stable economic situation in the country and the region, better prices for agricultural commodities (in particular beef meat) and free flotation of the exchange rate.

Wool and wool products exports reached 6% of total exports in the country during 2005.

WOOL PRODUCTION AND SHEEP NUMBERS

For the first time in the last 14 years there was a significant increase (11%) in sheep numbers, from 9,8 million in June 2004 to 10,8 million in June 2005.

After reaching a peak in 1991 with 26 million, sheep numbers had been decreasing until 2004 when the stock was the lowest of the last century.

Despite the fact that the profitability of the wool business was low, and better perspectives for the production of beef cattle, cropping, forestry and fat lambs, unusual high lambing % of the national flock explain the increment in sheep numbers.

Total wool production for the 2005/06 season is estimated at 46,3 million kg (greasy), approximately 32 million kg clean, (+22% compared to 2004/05).

Sheep production was adversely affected by harsh weather conditions during previous seasons (2002/03 and 2003/04), with heavy rains and poor sanitary conditions (internal parasites - footroot) resulting in a reduction of fleece weights and very low lamb marking %. However in the last two seasons, climatic conditions were very favourable (dry summers), as a consequence of which wools showed excellent quality conditions in terms of length, strength and colour, resulting in higher wool weights (15-20%) and lambing % well above the average.

WOOL PRICES
 

Wool prices for Corriedale (29m) and Merino (21,5m)   wools were reduced during 2004/05 and even further in the 2005/06 seasons, following the general trend of the international market. However, reductions in internal prices were higher than those observed internationally, with the exception of superfine merino wools (less than 20 microns).

WOOL EXPORTS

Exports of raw wool and wool tops in the 2004/05 season (Nov-Oct) reached a total volume of 43.6 mkg (greasy basis) which represent a 2,1% reduction compared to the 2003/04 season (44.5 mkg.).

In terms of volume, (see Fig. 4), the exports of wool tops represented 81,6% of the total, greasy wool 9,3% and scoured wool 9,2%.

Early processing still constitutes the more important sector of the Uruguayan wool manufacturing industry, with 7 combing plants operating during the present season.

Uruguay exported during 2004/05 season a total of 22,6 mkg. of wool tops (a reduction of 0,5%).

In terms of value, exports of wool and wool products totalled U$S 188,6 million, 0,1% less than the previous season.

Wool exported as tops represented 53,8% of total value of wool exports, followed by woven fabrics (24,3%) and wool garments (8,2%).  (see Fig.5)

Fig. 5 Uruguayan Wool Exports

The main importers of Uruguayan wool in the last 5 seasons are shown in Fig. 6

China, Germany and Italy accounted for nearly 78,5% of total Wool exports.

Regarding the exports of wool tops, the situation remains the same, with China as the main individual market (44%), followed by Italy (22%) and Germany (13%) (see Fig. 6).

Main issues facing the Uruguayan Wool Industry

1)    Low prices in the last two seasons for mid-micron and medium-merino wools.

2)    Uncertain outlook for mid micron crossbred wool prices (25 - 32m), destined to hand-knitting yarns and upholstery, particularly in China.

3)    Good prospect for alternative farming enterprises: beef cattle, cropping, forestry and sheep meat lamb.

4)    Lack of wool promotion in general. 

 

Report prepared by Roberto Cardellino - José Luis Trifoglio Uruguayan Wool Secretariat Baltasar Brum 3764 Montevideo 11.800 Uruguay For further Information, please contact e-mail mercados@sul.org.uy website: www.wool.com.uy and www.sul.org.uy