Friday 21 April 2017 10:17 AM
Farmers hold back wool from auction in the hope future prices will lift
By Tina Morrison
April 21 (BusinessDesk) - Less wool than forecast was offered at New Zealand's weekly auction as farmers held back bales from sale in anticipation prices may lift in the future.
Just 8,444 bales were put up for sale at yesterday's South Island auction, 20 percent below expectations, according to AgriHQ. Even with the low number of bales on offer, the clearance rate remained subdued at 67 percent, lagging behind the 71 percent clearance rate for the season to date, AgriHQ said.
New Zealand is the world's largest exporter of crossbred wool and weak demand for the fibre, which makes up about 80 percent of the national clip, has weighed on prices this season. The Ministry for Primary Industries noted in its latest quarterly outlook published this month that wool export prices may remain subdued until inventory is worked through and demand from China returns.
"Demand in the market remains low due to the current market conditions," said AgriHQ analyst Sam Laurenson. "Most farmers are likely to be still holding back bales in hope for an improvement in the market."
Compared to the last South Island sale two weeks ago, prices dropped across the board. The price for 30-micron lamb wool fell 40 cents to $3.70 per kilogram, while the price for 35-micron strong crossbred wool dropped 35 cents to $3.80/kg, AgriHQ said. Compared with last week's North Island sale, 30-micron lamb wool advanced 5 cents, while crossbred wool prices slipped 5 cents.
An estimated 6,500 bales are scheduled to be offered at next week's North Island wool auction.