Farmers hold back wool from auction in weak market

Friday 5th May 2017

Less wool than forecast was offered at New Zealand's weekly auction as farmers held back bales from sale in a weak market.

Just 6,821 bales were put up for sale at yesterday's South Island auction after 11 percent of the expected bales were withdrawn before the sale started, according to AgriHQ. Even with the low number of bales on offer, the clearance rate fell 2 percentage points from last week's auction to 73 percent, lagging behind last year's levels, AgriHQ said.

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, has weighed on prices this season. Wool export volumes were down 20 percent in the first quarter of this year, with exports to China down 34 percent. The Ministry for Primary Industries noted in its latest quarterly outlook that wool export prices may remain subdued until inventory is worked through and demand from China returns. That's prompted some farmers to hold back bales from sale in anticipation prices may lift in the future.

The gap between North Island prices and South Island prices closed at this week’s sale. Normally a premium is achieved in the South Island. Compared to last week’s sale in the North Island crossbred wool remained steady with 35-micron wool remaining at $3.85 per kilogram and 37-micron wool at $3.80/kg. Still, 30-micron lamb wool improved by 20 cents/kg to $3.70/kg, AgriHQ said.

Compared to the last South Island sale two weeks ago, prices were fairly steady with 35-micron and 37-micron crossbred wool both up 5 cents/kg. Still, 35-micron crossbred wool remains 22 percent below the same time last year. Lamb wool was unchanged compared to the last South Island sale, but a large fall occurred for 37-micron second-shear crossbred wool, which was down 20 cents/kg to $3.70/kg, AgriHQ said.

Some 5,500 bales are expected to be offered at next week’s North Island sale, 11 percent below the last sale in the North Island, AgriHQ said.

(BusinessDesk)

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