Woolly recovery

Uruguayan wool exports begin to recover on increasing demand from China and Europe.

The wool production industry is considered a strategic sector in Uruguay as, for years, it was one of the country’s main exports. In 2019, prior to the pandemic, Uruguay exported 6% of the total amount of combed wool. The country also exports scoured wool, wool fat and other variants, each of which have different added value.

The managing partner of a commodities broker in Argentina explained, “The reality is that 2020 was a bleak year for the export of wool and any minor improvement comes as a major relief.”

“The reality is that 2020 was a bleak year for the export of wool and any minor improvement comes as a major relief.”

Managing partner, commodities broker, Argentina

The COVID-19 pandemic has significantly hit Uruguayan wool exports, mainly due to falling Chinese demand which led to the lowest export levels ever registered. This decline reversed during the first half of 2021 as growing demand from China, Germany and Italy led Uruguay to export 12,838 tonnes of wool for USD 87 million, compared to the 7,391 tonnes exported for USD 28 million in the first semester of 2020.

In this context, wool not carded or combed registered the highest growth in exports, amounting to USD 44 million, with China being the main destination market. Although the Uruguayan economy has benefited from an improvement in the global economy, sales volumes are yet to reach pre-pandemic levels. Thus, the demand for fine wools, which amount to 40% of globally traded wool, is yet to fully recover.

A wool producer in Uruguay gave his perspective on the market, “Fine wool yarn exports, below 19 microns, have a very good acceptance in the international market but uncombed wool exports have been crucial for the recovery during the first quarter of 2021.”

Global demand for wool is expected to rise as many countries reopen their economies. During the pandemic, a number of Uruguayan wool producers have invested in improving their products and, in March 2021, Central Lanera Uruguaya exported to Japan the thinnest wool ever produced in the country, 12.9 microns.

“Some very specialised producers can still invest in new products but, most producers are in basic survival mode.”

Managing Partner, commodities broker, Argentina

The commodities broker felt this investment in R&D was an exception rather than a rule, “The sector suffered so much from the Covid-19 outbreak that I can foresee problems in future investments. Some very specialised producers can still invest in new products, but most producers are in basic survival mode and, in the short term, this could affect the quality of the product.”

The wool industry is a strategic sector for Uruguay for the diversification of exports which, additionally, has registered a continuous trade surplus over the last decade. The country is a top 5 wool exporter worldwide and its product has a global reputation for quality which this industry will not want to lose.

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