The amount of wool forecast to come through the auction system over the 2015/16 season may fall between 4 to 6% from the 480,000 bales that went through auction in the 2014/15 season, Wool Services International executive Malcolm Ching said. Ching is on the roster committee which estimates wool bale supply for the auctions. Earlier estimates were for a 3.3% decline to 464,000 bales.
While the amount of wool sold at auction had met forecasts so far this season, it was probably going to decline more than expected in the second half of the season, Ching said. The committee would meet early in the New Year to reassess its forecasts, he said.
New Zealand’s national wool clip is declining amid an increased focus on meat-producing sheep breeds and as farmers chase higher returns from dairy farming, causing sheep numbers to drop to the lowest level in more than 70 years. Expectations that already dry conditions in the South Island would continue through the summer was prompting sheep farmers to sell stock, reducing the amount of wool that will come up for sale.
“In the south we went through basically a winter drought – we hardly had anywhere near the amount of rain that we normally have so the ground-water levels are way down,” Ching said. “We are hearing that farmers have been destocking in anticipation of a coming hard season through the summer.”
The dry conditions were impacting coarse wool-producing sheep, which make up the majority of the national flock, rather than merino which thrive in dry marginal areas.
Sheep farmers in the South Island were running fewer hoggets, have culled their ewe flocks more heavily, were selling their capital stock, and would have fewer lambs because many hoggets weren’t reach the necessary weights for breeding, Ching said, citing conversations he’s had with private merchants around the country.
Some farmers were sending stock straight to slaughterhouses without being shorn, meaning the wool will be processed as slipe or as a wool pelt, he said.
In comparison, North Island wool supply was expected to be little changed given the region has had more rain and feed supply, he said.
Despite the forecast drop in wool supply, prices may not rise given wool faces intense rivalry from synthetic fibres, Ching said.
“Even though we are having this drop come off, it is very difficult to keep lifting the prices. In fact there is far more downward pressure being applied to us now,” Ching said.
Customers in China were baulking at record prices for lambs wool and had said they would seek alternative fibres if prices didn’t decline, while carpet manufacturers in India and Turkey were switching to synthetics.
About half of New Zealand’s wool clip is sold via the auction system. New Zealand wool exports increased 9.9% to $814 million in the year through November, according to the latest data from Statistics New Zealand.
