Friday, March 29, 2024

Wool pile grows

Neal Wallace
A collapse in the market for some types of crossbred wool has forced the stockpiling of thousands of bales amid warnings it could be another year before the market improves.
Reading Time: 2 minutes

For some types of wool, farmers have been told more has been put in storage than has sold in the last nine months.

PGG Wrightson wool manager Cedric Bayly was reluctant to reveal figures but said the firm was storing three times the normal volume because of the drying up of demand from China for predominantly second shear 38 to 40 micron crossbred wool that was 50mm to 75mm in length.

Bayly said the wool was mostly used for carpet yarn for which demand had dried up but the market remained relatively strong for finer crossbred and mid micron wool.

New Zealand Wool Services International chief executive John Dawson said in the year to the end of April, wool exports to China were 40% lower than the previous year.

AgriHQ data last week quoted 39 micron wool at $3.25 a kilogram compared to $5.80 a year ago, 35 micron wool at $3.35 compared to $5.85 and 29 micron at $6.65 compared to $7.85.

Bayly said wool was being stored on farms and with brokers, merchants and scours but he warned that if it got damp it would lose its colour and further erode in value.

The shift to hogget then full wool shearing in the coming months would help ease pressure on the market but Bayly said it was vital the stockpiled wool was carefully managed onto the market so prices were not compromised.

“China will come back as they get rid of their yarn stocks,” he said.

The speed with which prices fell took many by surprise but Dawson said a consequence of the low price could be to encourage yarn producers to use more NZ crossbred wool.

He recently visited China and hoped they might start blending the coarser fibre with higher-priced finer wool or use it in other fabrics.

Even if that happened there would be a time lag before it helped the price, Dawson said.

Current prices were comparable with 2008 when the global financial crisis hit and it could be the middle of next year before prices and demand improved.

“We always try to be positive but as I sit here today there is nothing that I can really seize upon that in the short term is going to change.”

Dawson said it was fortunate sheep farmers had a relatively good year from meat.

Beef + Lamb NZ said wool made up about 9% of farm income.

Simon Englebrecht who farms at Stoneburn in east Otago described wool prices and demand as hugely disappointing and said it showed it needed to be more aggressively marketed.

“Everyone wants a sustainable world. I do water quality testing, I use Overseer and I care for welfare of my animals and here we have wool which has all the good things people want but there is no demand for it.”

South Otago’s John Bennett who farms at Te Houka hadn’t sold any ewe wool this year because prices were half last year’s return, which he described as an insult.

He reduced autumn fertiliser to compensate for the lower income in the hope prices would lift over winter but they were getting worse.

“It’s lucky the season has been friendly.”

He agreed wool has been marketed poorly, saying the sector had not had any outside help but neither had it helped itself.

“If wool had been going good, there would be a lot less dairy farms.”

Bennett said he sold hogget wool for $3.70 a kilogram when he started farming in 1997 and it took until two seasons ago for that price to be bettered.

Total
0
Shares
People are also reading