NZ wool prices little changed on limited supply, strong demand, lower currency

Friday 7th August 2015

New Zealand wool prices were little changed at the latest auction, with prices underpinned by limited supply, strong demand and a lower currency.

The price for 35-micron wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand’s production, was unchanged at $6.15 per kilogram at yesterday’s South Island auction from last week’s North Island auction, according to AgriHQ. The price for lamb wool held at $7.20/kg.

Wool prices are buoyant during a typically low volume period at the start of the new season, amid strong demand from exporters, with auction clearance rates above 90 percent. The latest data showed wool exports rose to their highest value for a June month in more than two decades, aided by a lower currency and strong demand from China, the largest market.

“It is the combination of low volumes, low wool stocks and currency movements that are maintaining the strong wool prices in the market,” said AgriHQ analyst Emma Dent. “The low volumes and stocks continue to push exporters into the market and clearance rates have remained above 90 percent for the majority of the season thus far. “

Demand for the fibre saw lamb wool hit $7.45/kg in June, the highest price since AgriHQ began collecting wool prices in July 2005, while 35-micron wool rose to $6.20/kg, its highest since November 2013.

“It is the versatility of lamb wool and thus the strong demand from China that is also helping it perform so well,” Dent said. “Likewise, 35-micron wool is sought after in China which is also helping to maintain prices. “

China has also been importing more wool as it seeks to bolster supplies of the fibre into its processing and manufacturing facilities, which had become depleted, analysts said.

Dent said demand from China, which takes about two thirds of New Zealand wool exports, is expected to pick up in the next couple of weeks.

“Most market participants are expecting prices to remain at these higher levels for the next couple of weeks at least,” she said. “There remains some uncertainty over pricing beyond there, however most are feeling positive regarding price movements. “

BusinessDesk.co.nz

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