NZ wool prices fall at weekly auction; second-shear wool hits 7-year low

Prices fell at New Zealand's latest weekly wool auction, with some grades hitting their lowest level in more than seven years, amid continued lacklustre demand from China, the largest buyer, and as a higher kiwi dollar made the fibre less competitive.

At the latest North Island auction yesterday, 37-micron crossbred second-shear wool dropped 30 cents to $3.05 a kilogram from last week's South Island sale, hitting its lowest level since January 2010, according to AgriHQ. Compared with the previous North Island sale a fortnight ago, 37-micron longer fleece crossbred wool was down 25 cents to $2.85/kg.

Meanwhile, 30-micron lamb wool fell 5 cents to $3.65/kg compared with last week's South Island auction. In comparison with the previous North Island auction a fortnight ago, 29-micron lamb wool dropped 30 cents to $3.90/kg while 30-micron fibre was up 10 cents, AgriHQ said.

New Zealand is the world's largest exporter of crossbred wool and weak demand for the fibre, which makes up about 80 percent of the national clip, has weighed on prices this season, prompting farmers to stockpile bales in hopes the market will pick up. A lift in the value of the New Zealand dollar over the past week impacted demand at the latest auction, analysts said. The kiwi dollar recently touched a three-month high of 72.22 US cents.

"Market conditions remain subdued with the NZ dollar strengthening further and low interest from Chinese buyers dropping prices further," said AgriHQ analyst Sam Laurenson. "Next week's sale in the South Island has no sign of farmer's stockpiles of wool being released to the market with 8,000 bales expected to be on offer. Improvement in the market will be required before these stockpiles make their way into the market."

Some 73 percent of the 9,351 bales on offer were sold at yesterday's auction, bringing the clearance rate back in line with the season-to-date average, although still well down on last season's 89 percent clearance rate, AgriHQ said.

The value of New Zealand's wool exports fell 31 percent to $554 million in the year through April, according to the latest data from Statistics New Zealand. That decline pushed it down to 19th place in the rankings of New Zealand's largest commodity exports, from 14th position a year earlier.

(BusinessDesk)