It follows a slump, based on Australian weakness and international buyers being spooked by the United States-China trade war, in fine and mid-micron wools at the Christchurch sale two weeks ago.
About 1600 bales, averaging 18.3 microns, will be offered in Christchurch, nearly 1000 of them through PGG Wrightson.
The quality will be very good though more vegetable matter in fleeces as a result of the bumper growing season has kept shearing shed teams busy on the wool sorting tables, PGW’s South Island sales manager Dave Burridge said.
At least two representatives of Australian exporters are expected at the sale.
Fine wool values peaked about a year ago but there has been quite a correction in Australia over the last six weeks and it affects NZ prices. They are down about 30% from the peak.
With no sign of resolution of the US-China issues there is market uncertainty, Burridge said.
“The fine wool market is confidence-driven and there could be a nervous stand-off between buyers and sellers. It could test the resistance of growers to meeting the market.”
Buyers from around the world are buyers of fine wools but China is the heavyweight in the sector and the trade war has dampened demand there. The Australian price recovery last week will lead to optimism of gains here, he said.
After the strong growing season the good quality wool will have an advantage over Australian wool grown in difficult climate conditions this year, providing a point of difference for the NZ fleece.
Rules here for fly-deterrent management are now tighter than in Australia and expectations are that will provide a useful premium for NZ fine wools.
With the shearing season well advanced across the South Island there should be good volumes of fine wool coming to market over the next few weeks, Burridge said.
Thursday’s auction will have about 11,300 bales rostered, mainly crossbred wools but also fine and mid-micron. The latter were also hammered in the sale on August 29 and are about 20% off their price peak a year or so ago.
Despite the sharp falls both fine and mid-micron wools are still at historically high levels, above the 10-year average.
For both strong and mid wools there is good-quality, pre-lamb shear fleece coming through.
For strong wools struggling with poor prices for a long time there has been no change in market signals, Burridge said. There is also some of last season’s wool coming to auction.
