Early supplies of lamb wool traded at a record $7.50 a kilogram when it began surfacing at auction last month, beating the previous record price of $7.45/kg set in June this year, and marking the highest price that AgriHQ has recorded since it began collecting wool prices in July 2005.
New Zealand’s lamb wool season is just starting to pick up, with the first of the new season fibre emerging in November ahead of the peak supply period from December through February. However the early season wool tends to be more highly sought after for its finer micron and whiter colour.
“The first new season lambs have really just arrived. For the fine, white stuff you do have to be in now and through January,” said Richard Kells, director at Napier-based brokerage Kells Wool and the chair of the North Island Wool Brokers Association.
“Like any market, the first lots on the market often get a premium because everyone has been starving for it since last year.”
Still, Kells expects the elevated price will continue through the season, driven by fashion demand from overseas. China is the largest buyer of New Zealand wool for processing, however end markets for garments tend to be in Western Europe and North America, he said.
“I think these high prices will be quite sustained, I don’t think it’s totally all about early money,” Kells said. “I would say it’s a very healthy situation.”
Lamb wool tends to become coarser with age, starting from 28 microns early in the season and increasing to between 29 and 31 microns in January, he said.
A decline in supply may also be underpinning the market. New Zealand’s wool production has slumped in line with a reduction in the national sheep flock, which last year dipped below 30 million for the first time since 1943.
Global wool production has also slumped reflecting the decline in the higher yielding flocks of New Zealand and Australia, the world’s two largest wool exporters.
New Zealand supply for this season is difficult to forecast, given much depends on farmer decisions on shearing and livestock numbers, and the impact of a potential drought, Kells said.
Higher prices could prompt farmers to shear earlier, helping buoy farm incomes and offsetting lower returns from sheepmeat.
“It’s quite difficult to gauge,” Kells said. “We know we have got reduced numbers so it will probably be a reduced volume of lamb’s wool for sure, but how much I wouldn’t like to say.”
