NZ wool prices fall as increased supply, soft demand weigh on prices

Friday 16th January 2015

New Zealand crossbred wool, which accounts for the majority of the country's production, fell at auction this week as higher volumes and soft demand weighed on prices.

The price for 35 micron clean wool, commonly used for carpets, fell 2 percent from last week's auction to a nine month low of $4.85 per kilogram, according to AgriHQ. In the apparel wool market, 25 micron wool fell 11 percent to a six month low of $8.80/kg from the previous auction on Nov. 20, while lamb wool slipped to $6/kg from a three year high of $6.05/kg at last week's auction.

Wool, New Zealand's 14th largest commodity export, is easing amid high seasonal supplies during the main shearing season, where some 60 percent of the annual crossbred wool clip is shorn. Only 71 percent of the volume sold at the latest auctions in the North and South Islands as some 17,432 bales were offered, the largest volume in seven months. Meanwhile a 50 percent slump in oil since June to near six year lows is increasing the lure of cheaper synthetic fibres such as nylon carpets.

"Those impacts on price are likely to be the main affects for the next couple of months," said AgriHQ agriculture analyst Ivan Luketina. "Despite the big fall at this auction, mid micron wools are holding up slightly better than the coarse wools and lamb wool is still very high historically. This suggest that apparel wools are doing better, as there's less substitution between wool and synthetics in clothing."

Still, some of the weakness in the global market is being masked by a softer New Zealand dollar, Luketina said. While the price for 35-micron wool is down 8 percent from a year ago, it is down 14 percent in US dollar terms, he said.

Merino wool didn't trade in the latest auctions.

BusinessDesk.co.nz

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