NZ wool prices decline at auction amid stronger kiwi dollar, soft global demand

Friday 15th July 2016

New Zealand wool prices weakened at auction as a strong local currency and soft global demand weighed on buyer appetite.

The 35-micron crossbred fleece price slid to $5.40 per kilogram at yesterday's South Island auction, from $5.55/kg at the comparable South Island auction two weeks ago, AgriHQ said. The price is 35 cents/kg lower than a year earlier and 26c/kg below the five-year average.

The price for 37-micron strong crossbred wool also traded at $5.40/kg, down 15c/kg on the comparable auction two weeks ago. This is a 35c/kg drop on last year and 7c/kg below the five-year average.

The New Zealand dollar has strengthened amid global market volatility following the UK's vote to leave the European Union last month, making New Zealand exports less attractive.

Analysts said wool buyers were cautious and bought only enough wool to cover their immediate requirements, with just 61 percent of the 5,800 wool bales cleared at auction yesterday. The volume of bales on offer was 25 percent below the corresponding five-year average, putting the sold volume 47 percent below the five-year average.

"The strong New Zealand dollar and soft global demand continued to be main limiting factors at this week’s South Island auction," said AgriHQ analyst Shaye Lee. "Buyers’ appetite was towards those that matched their immediate contractual needs, generating some competition for specific types of wool. The wool types that AgriHQ track generally fell across the board."

The next sale on July 27 includes about 6,000 bales from the North Island.

Wool is New Zealand's 14th largest commodity export, worth $793 million in the year through May.

BusinessDesk.co.nz

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