NZ wool prices slip on higher kiwi dollar, reduced demand from China

Friday 5th February 2016

New Zealand wool prices declined as an increase in the kiwi dollar made the country's exports less attractive.

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, slipped to $5.74 per kilogram at yesterday's combined North and South Island wool auctions, from $5.95/kg last week, according to AgriHQ. Lamb wool declined to $7.14/kg from $7.25/kg last week.

A stronger New Zealand dollar makes the country's exports more expensive for overseas buyers. Over the past five days, the kiwi dollar has jumped 2.7 percent against the greenback, the transacting currency for many commodities. Still, the price for 35-micron wool remains 18 percent ahead of the same time last year, while lamb wool is 17 percent higher.

"Despite New Zealand's higher wool prices, international buyers have yet to turn to other markets or synthetics which indicate that demand for New Zealand product is strong enough to maintain higher prices," said AgriHQ analyst Emma Dent. "However, currency is still an important thing to watch. Prices eased at this week’s combined North and South Island auction on the back of a higher New Zealand dollar."

Dent said demand reduced from China, New Zealand's largest wool market, ahead of the Chinese New Year holiday period which starts this weekend. Just 78 percent of the combined 13,356 bales offered at auction were sold, down from 94 percent that cleared at auction last week, and marking the lowest level since October.

BusinessDesk.co.nz

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