There’s a rising mood of optimism based on higher prices in major markets, product moving through the entire wool market pipeline, a sell-down in wool stocks from the previous season and an impact from the plastics in the oceans issue, PGG Wrightson’s South Island sales manager and auctioneer Dave Burridge said.
Prices at the last Christchurch auction on June 28 were well up on the final 2017 sale and June itself was a strong selling month.
The new auction season was starting in Napier on July 12 with Christchurch a week later.
Prices are historically low and need to go higher for the sustainability of wool growing but the signs are positive, he said.
Very high prices for fine and mid-micron wools finally appear to be having a pull-up effect on crossbred fleece.
“We expect it to get better.”
Burridge estimated crossbred auction prices rose about 12% year-on-year after allowing for sale-day volatility at certain times, especially evident for the fine, 31-to-34 microns, end of the sector.
“A 12% rise isn’t bad and this year we’d be targeting that level again.
“Growers will need that as the shearing pay rates are going up.”
Auction comparisons included: 35 micron up to up 11% to $3.70kg/clean in late June from $3.33 last year, 36 micron up 16% to $3.69kg/clean from $3.17, 37 micron up 13% to $3.65 from $3.22, 38 micron up 6% to $3.64 from $3.44 and 39 micron up 12% to $3.62 from $3.24.
Most of the national clip is in the 35 to 37 microns range, given crossbred sheep dominate at 80% of the flock.
Probably about 65% of wool is 35 to 37, as crossbred lambs’ wool is typically in the 28 to 31 microns range because it is less mature and crossbred hoggets are typically 31 to 34 microns for the same reason, Burridge said.
Strong prices in June reflected reduced supply as wet weather meant a lot of sheep could not be shorn, a factor that helped clear some of the older wool in storage.
Burridge thought about two-thirds of that wool will now have been cleared.
A very good growing season in most regions overall means new season wool will be very good quality, with greater weight, good colour and strong staple strength.
Environmental influences are appearing following the international publicity over the volume of plastic being found in the world’s oceans and campaigns to reduce the incidence of that happening.
“It has put a focus back on wool’s natural qualities, being biodegradable, and the provenance around that.”
The market is not expecting a spike in crossbred prices.
“It’s been a gradual improvement, which should continue, but it’s a long way from being a spike.”
He believes crossbred prices could withstand a peaking of the fine wool, up about 35%, and mid-micron, about 18% on average, markets.
The Christchurch sale on July 19 has 10,000 bales rostered but at time of writing the offering was a bit lighter, at 9200 bales.
