Product diversification, expansion into new markets, and investment in new technologies are some of the factors that have allowed the wool industry to achieve and maintain its position in the export economy.

With 36 active markets, Uruguay is the 4th largest exporter of wool top by volume in the world, coming in 6th when exports are measured in dollars. Measured in value, Uruguay is also the world’s 4th largest exporter of scoured wool, and ranks 5th in raw wool exports.
Wool and knits exports rank 17th in Uruguay’s export matrix and accounted for 1.2% of total external sales in 2020.
The Uruguayan wool sector contributes to the diversification of the country’s exports and its combing industry is in line with current public policy objectives.
Over the last ten years and up to 2021, the Uruguayan wool industry’s balance of trade, measured in US dollars, has recorded a surplus, as shown in the graph below.

Graph No. 1 – Uruguayan Wool Balance of Trade (NCM 51)

Years 2010-2021 (Millions USD)

With China’s significant participation, the export markets for raw and scoured wool have remained strong. As an opportunity, consumption in the market for luxury goods – including Merino wool products – shows growth.

Graph No. 2 – Uruguay’s Main Trading Partners (NCM 51)

January-April 2021 (Part. USD)

The Impact of the Covid-19 Pandemic on the Uruguayan Wool Industry

It is worth mentioning that the global COVID-19 pandemic had a negative impact on all exports in 2020, and wool was no exception. In the year prior to the pandemic, wool ranked 12th among exported products and accounted for 2% of total exports. Total exports from the wool sector in 2020 stood at USD 98 million.
Exports of raw and scoured wool reached USD 74 million in 2019, growing by an average of 4% per year over the past 10 years. In 2020, at the height of the health crisis, exports of raw and scoured wool recorded sales of USD 41 million.

All the same, between January and April 2021, these exports totalled USD 29 million, almost 72% of the exports for the full year of 2020, evidencing a rapid recovery in the sector.
Similarly, wool top exports reached USD 53 million in 2020, significantly lower than previous yearly export tallies due to the effects of the pandemic. Looking at 2019 exports — prior to the disruptive effects of the pandemic — total wool top exports stood at USD 106 million and had increased by an average of 1% per year over the previous ten years.
The wool top sector accounted for 54% of total exports of the national wool chain in 2020. In January-April 2021, these exports accounted for 43% of total wool exports so far this year.

What is Happening with the Wool Sector in the First Quarter of 2021?

In the first four months of 2021, 8,037 tonnes of wool were exported, 32% more than the 6,098 tonnes exported last year amidst a slump in demand caused by the Covid-19 pandemic.
China was the main buyer, increasing its purchases by 22% to 3,138 tonnes, followed by Italy — the destination that increased its Uruguayan wool imports the most, nearly tripling its purchases in the first four months of last year to reach 1,117 tonnes — and Germany with 683 tonnes.
Wool exports increased 14% in the first four months of 2021, as compared to the first four months of 2020. Measured in volume, China consolidated its position as the main buyer of Uruguayan wool, with a share amounting to nearly 40% of the total.
When exports are measured in millions of dollars, the European Union tops the list with 37% of the total, followed by China with 33%.
Wool top sales, which fell by nearly half in 2020 compared to 2019 and, were up in the first four months of 2021. Volume exported was up 18% to 3,379 tonnes, yet dollar revenue from sales fell 3% to USD 24 million due to a decrease in prices.

A Deep Look into the Uruguayan Wool Industry in April 2021

Sales of wool and knits stood at USD 11 million in April 2021, nearly tripling the volume recorded in April 2020. Such increase can primarily be attributed to the higher volumes exported to China, Italy, Germany, and Bulgaria.
In particular, wool exports to China stood at USD 3 million, with the volume exported more than doubling in the year-on-year comparison — especially due to higher sales of uncarded and uncombed wool.
In the case of Italy, higher volumes of combed and uncombed wool exports made a substantial difference in April 2021 — increasing recorded volumes eightfold over April 2020 levels at USD 2 million.
Similarly, exports of uncombed wool to Germany reached almost USD 2 million. Although the Uruguayan wool industry recorded no exports to Bulgaria in April of 2020, data from April of this year show exports of USD 1 million, primarily coming from exports of uncombed wool products.
Across the first four months of 2021, the industry exported USD 53 million, amounting to 55% of total exports for 2020 and offering an encouraging outlook.

 

Source: Uruguay XXI