NZ lamb wool price jumps to 3 1/2 year high on increased demand
By Tina Morrison
Jan. 30 (BusinessDesk) - New Zealand lamb wool prices rose to a three-and-a-half year high at auctions this week on increased demand for the fibre used in clothing, as buyers benefited from a decline in the local currency.
The price for lamb wool in the North Island auction jumped 30 cents to $6.40 per kilogram, from last week's North Island auction, while the South Island auction price rose to $6.25/kg on lower volumes, according to AgriHQ. The prices are the highest for lamb wool since July 2011.
The price for 35-micron clean wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, rose to $5.05/kg in the North Island and $5.10/kg in the South Island, from $4.85/kg the previous week. Merino wool didn't trade at the latest auctions.
New Zealand's wool market is benefiting from a weaker local currency, which makes the nation's exports more competitive. The New Zealand dollar slumped this week to its lowest level in almost four years after the Reserve Bank dropped its tightening bias and said interest rates in the future could go up or down.
"The rises for most wool types of close to 5 percent can mostly be accounted for by the quick drop in the New Zealand dollar recently," said AgriHQ agriculture analyst Ivan Luketina. "It has given buyers a good opportunity at a more favourable exchange rate. The increase is a good result for growers at what was the largest combined auction offering of the July-June season so far."
Lamb wool is offering a premium over other wool types, said Luketina, noting that when the fibre last hit these levels during a high commodity cycle, 35-micron was selling for more than $7/kg.
"Lamb wool has been at a premium for the past three years and it's specific buying and supply pressure for lamb wool that has pushed up the current premium above normal levels," he said.
Exports of wool jumped 6.7 percent to $752 million in 2014, from the year earlier, retaining its position as the nation's 14th largest commodity export, according to Statistics New Zealand data released today.