NZ wool prices hold at elevated levels as volumes decline

Friday 29th May 2015

New Zealand wool prices remained elevated at auction this week, with lamb wool touching a fresh four-year high, as less wool was offered for sale.

Lamb wool jumped to $7 per kilogram at yesterday's North Island auction, from $6.90/kg at last week's South Island auction, marking its highest level since March 2011, according to AgriHQ. The price for clean 35-micron wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, held at $6.20/kg, its highest level since November 2013.

Some 8,907 bales were offered for auction yesterday, down from 9,733 bales last week. Volumes are expected to decline further at next week's South Island auction where 7,100 bales will be offered for sale. Demand remained strong, with 94 percent of the wool offered at auction sold yesterday, the eighth straight week the auction clearance rate has held above 90 percent.

New Zealand is heading for its smallest annual wool clip in six years, reflecting the lowest sheep flock in more than 70 years, dry conditions and an increased focus on meat producing breeds of sheep, according to analysts.

The country will probably produce 138,400 tonnes of greasy wool, or 833,700 wool bales, in the annual season that runs through June, down 5.4 percent on the year earlier, according to farmer-owned industry organisation Beef + Lamb New Zealand. That would mark the lowest level since the 2008/09 season, when the clip dropped to 132,400 tonnes as farmers decided against a second shear with low wool prices.

Still, prices are holding up on lower volumes. The value of wool exports increased 15 percent to $796 million in the year through April, making it New Zealand's 13th biggest commodity export, according to data released this week by Statistics New Zealand. Some 51 percent of New Zealand's clean wool exports went to China last month.

BusinessDesk.co.nz

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