“You normally get some price resistance when they get this high,” he said from China.
“We haven’t seen it yet but you can’t discount it from happening.”
China was the key market for New Zealand wool and a downturn in sales in recent years was the reason the strong price had fallen away.
And that was why exporters like Dawson kept travelling there to get a gauge on the market.
Sales into Europe, the next most important market, had remained steady.
NZ used to have a very good market in China for the big volumes of 32 to 38 micron wool used in top-making.
But volumes were down about 40% in the last four to five years as manufacturers shifted to finer wools to make garments.
That fall in demand hit crossbred wool prices very hard.
“People are prepared to pay more for the fineness and the feel of the higher-value articles because they are now able to afford them.”
In recent months strong wool prices spiked up briefly but fell again and recovered again at the latest sales in Napier and Christchurch.
At Christchurch on November 16 some categories were up by 10% to 17% on a fortnight earlier.
Examples included good colour 33 micron up 40c at $4.24/kg clean; 34 micron up 60c at $4.02/kg clean; 35 micron up 47c at $3.71; 36 micron up 47c at $3.61/kg clean; and 37 micron up 35c at $3.60/kg clean.
But the jury was still out on what might happen next for the typical strong wool fabric.
“We’re getting a better feel for the Chinese market and we’re more optimistic about what’s ahead but it is a tentative view at this stage. We can’t be sure and we haven’t seen it yet.”
Exporters were getting orders for coarser wool but not in the volumes to drive prices consistently higher.
“Some of our users here are huge and they are restocking at attractive levels.
“They don’t need new demand to be doing that and they expect demand to pick-up again after the Chinese New Year.”
No-one was really sure how big the volumes were of unsold wool overhanging the market but there was a lot and it was just trickling onto the market.
The real test would be the first three months of next year when big volumes of this season’s wool came on to the market.
The downturn had proved farmers who supplied better coloured and well-prepared wool were seeing better demand than those supplying poorer wool, he said.
The impact on prices of slower Chinese buying meant European carpet makers could buy at attractive prices.
“The major European guys have been buying all the way through and some are using more NZ wool than in the past,” Dawson said.
“But they can’t take up the slack of the reduced China buying.”
WSI was typically one of the leading buyers at the wool auctions, buying 715 of the 6715 bales sold at the latest Christchurch event at the Canterbury A&P Show.
Its sister company in the Lempriere group, J S Brooksbank, bought 810 bales, amounting to 22% of the offering between them.
The two companies operated separately with WSI focusing on scour product and JSB on greasy wool.
