NZ wool prices decline at auction as demand wanes

Thursday 24th March 2016

New Zealand wool prices eased at this week's auction as buyers sourced their immediate needs to meet their contracts with volumes tapering off following the end of the peak shearing season.

Coarse crossbred wool, of between 36 to 39 microns, was steady to 4 percent cheaper at an average $5.69 per kilogram at yesterday's South Island auction, compared with last week's combined North and South island auctions, according to AgriHQ. Still, it remains about 80 cents per kilogram higher than a year ago.

Lamb wool traded at a 1 to 3.5 percent discount compared to the previous auction, with the lamb wool indicator sitting at $6.41/kg, largely consistent with last year, AgriHQ said.

Wool prices generally slipped at this week's auction on weaker demand, with just 81 percent of the 8,200 bales on offer being sold, down from last week when 91 percent of the 18,733 bales at the combined auctions were sold.

"It seems the buyers' immediate needs for wool for fulfilling their contractual agreements have been met by the past auctions, capping the competition," said AgriHQ analyst Shaye Lee.

This week's auction was held a day earlier than normal ahead of tomorrow's Easter public holiday.

Wool is New Zealand's 14th largest commodity export, with data published by Statistics New Zealand today showing the country exported $70 million worth of wool in February, unchanged from February last year, even as the volume fell to 10,754 tonnes from 11,756 tonnes. The country's wool clip is declining as sheep numbers fall to the lowest levels in more than 70 years after farmers chasing higher returns converted to dairy, or focused more on meat producing sheep breeds. Concern about potential drought heading into summer had also prompted many farmers to reduce their flocks this season.

In the 12 months through February, the value of New Zealand wool exports rose 7.1 million to $827 million, the statistics agency said.

(BusinessDesk)

BusinessDesk.co.nz

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