June 23 (BusinessDesk) - Prices fell at New Zealand's latest weekly wool auction, with some grades hitting their lowest level in seven and a half years, amid continued lacklustre demand from China, the largest buyer of the fibre.
At the latest North Island auction yesterday, 37-micron crossbred fleece wool dropped 25 cents to $3.25 a kilogram from the previous North Island sale a fortnight ago, and was 5 cents lower than last week's South Island sale, according to AgriHQ. The latest price marks the grade's lowest point since November 2009. Meanwhile, 30-micron lamb wool fell 40 cents to $3.25/kg compared with the previous North Island auction and is approaching February's low of $3.20, which was the weakest price since July 2009.
The latest declines saw AgriHQ's indicators for all wool styles dropping with the lamb wool indicator down 14 cents to $3.94/kg from last week, and the coarse crossbred indicator down 9 cents to $3.45/kg.
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, prompting farmers to stockpile bales in hopes the market will pick up. The Ministry for Primary Industries forecast in its latest quarterly outlook that wool export revenue likely fell 28 percent to $550 million in the year through June as a lack of demand from China weighed on prices. The Ministry noted that the overhang of inventory will make it difficult for prices to rise quickly.
"Prices continue to fall due to the lack of demand from overseas buyers," said AgriHQ analyst Sam Laurenson. "The entire market remains incredibly weak in comparison to last season and has no sign of improving in the near term."
A decline in the kiwi dollar heading into yesterday's sale made local wool even cheaper for overseas buyers, and helped lift the auction clearance rate, with 81 percent of the 10,760 bales sold at the event, Laurenson said. That's a jump from last week's South Island sale when only 56 percent of the 7,937 bales were sold, the second-lowest clearance rate this year.
Some 9,000 bales are expected to be offered at next
week's South Island