Prices are off the lows of early February, also helped by many farmers holding back supply. At Christchurch on Thursday, strong wool prices just made it back to the “trigger’’ point at which buyers might decide it is worth returning, NZ Wool Services International (WSI) marketing manager Malcolm Ching said.
This is at about $3kg greasy for full body wool and second shear.
With second shear 3 inches to 4 inches long rising to about $4.10kg clean at auction, the greasy value is round the $3.15 mark, Ching said. Good colour full body wool was at about $4.35kg clean.
The kiwi dollar was about 3% lower than a week earlier, and this added about 3% to 4% to prices, with the increase across all types being in the 4% to 10% range.
A 28 micron fleece was about 4% dearer than a week earlier at $7.90kg clean; 34 micron full fleece $4.55kg. First lambs’ wool, 29.5 micron 2 inches to 3 inches in length up nearly 10% at $4.40kg clean, and 31 micron 2 to 3 inches also stronger at $3.85.
Average to poorer wools were also up, and crossbred oddments were up to 9% higher.
The Christchurch auction had 5300 bales offered, with 4629 bales sold, leaving a pass-in rate of 12%.
Traders from China led the market, with competition from Western Europe, the steady lift in prices encouraging them that they can make money on further improvement, Ching said.
Supply and demand is reasonably balanced, with the wool coming forward from the farmers always prepared to meet the market – meaning there’s no over-supply but not a real shortage either.
He expects those farmers who have held back wool, will be starting to take notice. Some might come back in for their own financial or logistical reasons, but many who do not have to sell might take the view that prices are rising and they can wait a bit longer.
If the dollar slips further from here, that should be a good call, Ching said.
“It’s crucial for the market that the wool on the sidelines comes back very gradually. The downside of the hold strategy is that it creates an invisible stockpile that can feed back in a way that it limits the upside.’’
Market expectations are that brokers and merchants are talking to farmers about the need for a gradual return of volumes. There’s no sign yet of a rush.
This Thursday will have sales at both Christchurch (6600 bales scheduled) and Napier (11,900 bales).
Ching believes the market can cope with the higher volumes. The North Island’s shorter second shear and lambs wool suits the China and European markets, while the South Island has a wider range, but no big volumes in any particular type.
