NZ lamb wool price rises to 3-year high on increased demand

Tuesday 27th January 2015

New Zealand lamb wool prices rose to a three year high last week on increased demand for the fibre from clothing manufacturers in China.

The price for lamb wool jumped 10 cents to $6.10 per kilogram at last week's North Island auction, matching a price last seen in January 2012, according to AgriHQ. The price for 35-micron clean wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, was steady at $4.85/kg compared with the average price in auctions in both islands the previous week. Merino and mid-micron wool didn't trade in the latest auction.

New Zealand's wool market is benefiting from a weaker local currency, which makes the nation's exports more competitive. The New Zealand dollar has fallen almost 5 percent so far this year, touching its lowest level in three years as currency traders drop expectations for interest rate hikes and start to price in the chance of a cut. Buyer demand at last week's auction saw 97 percent of the 10,000 bales on offer sold.

"Over a quarter of the wool offered was lambs wool so that suggests it's gone higher on reasonably good volumes, which means there must be good demand for the wool at the moment," said AgriHQ agriculture analyst Ivan Luketina. "Prices were mostly steady to slightly up. The falling dollar has helped push prices up slightly for some types and there has been steady demand."

Traders will be looking to see if prices hold at this Thursday's auctions across both the North and South islands, where more than 20,000 bales will be offered, Luketina said. A further decline in the New Zealand dollar since last week may help support local prices, he said.

Dry weather may start to crimp wool supply over the next month as farmers delay shearing because of concerns that it will stimulate feeding at a time when they face low pasture growth, he said. New Zealand is in the midst of its main shearing season from December to early February, accounting for about 60 percent of the annual crossbred wool clip.

Wool is New Zealand's 14th largest commodity export.

BusinessDesk.co.nz

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