NZ wool market shows signs of life in latest auction

Friday 14th July 2017

New Zealand's wool market picked up from its recent doldrums at the latest South Island auction as a weaker dollar and wider range of wool types on offer helped to lift prices at a more robust clearance rate.

Some 77 percent of the 4,432 bales offered were cleared, ahead of last season's clearance rate to date of 58 percent, while prices were largely higher than last week's North Island sale, AgriHQ said. The coarse crossbred indicator showed prices rose 9 cents to $2.76 per kilogram as the longer 37 micron crossbred second shear prices climbed 15 cents to $2.80/kg week, outweighing a 5 cent decline in prices for the shorter 37 micron second shear to $2.40/kg.

However, the previous South Island auction two weeks ago showed a mixed outlook, with a range of movements over the types of wool. Lower quality crossbred fleece 37 micron dropped 15 cents to $2.95/kg while the higher quality wool lifted 5 cents to $3.10/kg. There was a limited range of lamb wool this week, and of the types offered 31 micron lamb wool prices increased 15 cents to $3.20/kg.

New Zealand is the world's largest exporter of crossbred wool and weak demand for the fibre, which makes up about 80 percent of the national clip, saw the worst season since the global financial crisis in 2016/17 as China, the largest buyer of the fibre, switched its preference to fine wool and away from strong wool. In its latest quarterly outlook, the Ministry for Primary Industries projected wool exports fell 28 percent to $550 million in the year through June due to the lack of Chinese demand.

That weak demand prompted farmers to stockpile bales in hopes the market will pick up. Industry estimates suggest 150,000-to-200,000 bales may have been stockpiled by farmers, brokers, merchants and exporters, as sellers rejected prices below the cost of production.

It is expected that there will be 9,100 bales on offer at next week’s North Island sale.

(BusinessDesk)

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