NZ wool prices jump to multi-year high at auction, amid strong exporter demand
By Tina Morrison
May 22 (BusinessDesk) - New Zealand wool prices jumped to multi-year highs at auction even as the volume on offer rose 78 percent, amid strong demand from exporters.
The price for clean 35-micron wool, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, rose to $6.20 per kilogram at yesterday's South Island auction, from $5.80/kg in the North Island auction last week, and reaching its highest level since November 2013, according to AgriHQ. Lamb wool jumped to $6.90/kg, from $6.65/kg, marking its highest level since April 2011.
Some 9,733 bales of wool were offered for auction yesterday, up from 5,469 bales at last week's auction and 6,346 bales the previous week, as farmers who had been holding out for better prices put their bales on the market. The strong demand meant 91.4 percent of the wool offered at auction was sold yesterday, the seventh straight week the auction clearance rate has held above 90 percent.
"Volumes were up at this week’s South Island auction as a result of price increases at the previous auction," said AgriHQ analyst Emma Dent. "There was steady demand which added strength to the market. Exporters struggling to source enough wool to meet contracts also added strength to this week’s auction."
A weaker New Zealand dollar also helped bolster prices, according to NZ Wool Services International, a unit of Australia’s Lempriere and the nation’s largest wool scourer and exporter. The kiwi has declined about 1.5 percent against the greenback since last Thursday as traders price in an increased chance that New Zealand's Reserve Bank will cut interest rates.
Wool is New Zealand's 13th largest commodity export. The latest trade figures, detailing New Zealand's exports in the year through April, are scheduled for publication by Statistics New Zealand next Tuesday.