New Zealand is not alone as Australian wool prices have also decreased by 25% since March. Prices achieved in New Zealand have dropped to average $1.50-$1.70/kg greasy for good crossbred second shear fleece. This is a hard pill to swallow for many as crossbred wool returns are no longer covering the cost of the shearing. AgriHQ data shows current crossbred wool prices are $1.84/kg clean, back by about 31% on this time last year to what can only be described as dire. However, the industry is far from giving up. Those involved in the wool sector from the woolshed to the end market are working hard to ensure that wool will continue to have its place in the market and recover from the current downturn.
Wool prices have seen this sort of drops in prices before. The backend of 2008 as markets reacted to the global financial crisis, wool prices dropped by about 25% down to $2.92/kg clean in four months. Although, right now $2.92/kg clean for crossbred ewes’ wool does look attractive. Wool prices did ease about another 30c/kg clean to bottom out in 2009 but prices did improve from there to go over $6.00/kg clean at the peak in 2011.
Like any product, there needs to be demand from the end consumer for the product to sell. Places like America that are a destination for the end product are still heavily impacted by the effects of Covid-19. These markets need to be back buying and selling before the demand will flow back to the woolshed.
For farmers, shearing will come at a cost in the short term but there is optimism that once the global markets get back on track, demand and prices for wool will improve. In the short term, it is important to remember the animal health and management benefits of shearing. With lamb and ewe prices relatively strong, it would not take many losses from cast ewes at lambing to cost more than the difference of the wool cheque and the shearing bill.
These are unusual times, fortunately, wool still has a demand, and wool can be sold. It may not be at a fantastic price, but it could be worse.
