NZ wool prices fall to lowest level in more than a year amid weak Chinese demand

Friday 16th September 2016

New Zealand wool prices fell to their lowest level in more than a year amid weak demand from China, the country's largest export market.

The price for fine crossbred wool slid at yesterday's North Island auction, with 35-micron fibre declining to $5 a kilogram from $5.25/kg at last week's South Island auction, $5.40/kg at the comparable North Island auction two weeks ago, and $6.55/kg a year ago, according to AgriHQ. That's the lowest level for the fibre since January 2015.

The price for strong crossbred wool also fell, with 39-micron fibre declining to $4.95/kg from $5.20/kg at last week's South Island auction, $5.30/kg at the comparable North Island auction two weeks ago, and $6.30/kg a year ago. That's the lowest level for the fibre since April 2015.

"We're seeing a change in price dynamics as a resulting factor of general soft China demand, compared with the last two years," said AgriHQ analyst Shaye Lee. "Whereas China used to drive demand for wide variety of wool types, its tight market conditions led to them being more cautious. They are only wanting certain types of wool required to continue their core production processes. This target buying is leading to sporadic pick-up in the activity that's concentrated on certain wool types at certain times."

AgriHQ's Lee said while the prices are softer compared with the past two strong years, there is still the occasional increase in activity that makes some segments of the sector strong at times.

There was also less volume sold at yesterday's auction, with just 5,026 bales sold, or 70 percent of the total 7,143 bales on offer. The volume is down 11 percent on last week, when 54 percent of the 10,454 bales on offer were sold, AgriHQ said.

BusinessDesk.co.nz

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