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Wool exporters scrambling to fill lower-grade fibre orders

Quality of NZ wool clip leaves exporters scrambling to fill lower-grade fibre orders

By Tina Morrison

March 15 (BusinessDesk) - New Zealand wool exporters scrambling to fill orders for lower-grade wool have driven up the price of what are known as oddments in recent weeks because the season to date has delivered an unexpectedly high-quality clip.

Wool oddments are the shorter parts of the fleece, such as from the belly, second pieces, eye clips, necks and those parts stained or otherwise discoloured. They are often baled and sold separately, but a paucity of lower-quality wool has meant exporters are blending oddments with other higher wool grades to make up orders, said Malcolm Ching, an executive at New Zealand Wool Services International in Christchurch.

Wool is New Zealand's 14th largest export commodity, with annual exports of the fibre up 8.2 percent to $814 million last year. Exporters typically contract to sell wool several months ahead of delivery on the expectation they can buy the fibre at auction as needed and a shortage of lower-quality wool has driven up prices for oddments at New Zealand auctions in the past six weeks.

"The season overall has been quite a good growing season, so we haven’t seen a lot of discoloured wool," Ching said. "The industry was anticipating more of it available at a certain time. We were a bit light on that poorer side, so the oddments, the off-colour lines, the bellies and pieces, some of those have been used to help us make the product.

"There is a supply-demand imbalance and that is pressuring up anything that is an off-style or poorer-style type wool and that is receiving basically premium levels at the moment," he said. "If you can’t get enough of that yellowy wool or off-colour wool from the main shear then the oddments tend to get pressured up because they become part of the component mix again to make the right spec'd products for the clients."

The practice of blending in different wool types was common, and often occurred during a season as climatic conditions and wool production varied, he said.

"Farmers, in particular, get upset when they hear that we as exporters are putting oddments back with some of their main body wool but their role is to separate the components, our role is to take the ingredients that make the cakes and keep a consistency over 12 months," Ching said.

If exporters delivered a product that was "too good", clients may expect it again the following year, he said.

"That, in the long run, can make a bit of a rod for our back in the future in that it becomes an expectation that when they order a poor type, they will then get delivered a better type," he said. "If they expect too good all the time then they start to complain - they shift their ideas of what they should be receiving."

Ching said the premium prices paid for oddments may not last because there has been a rapid increase in the volume of poorer grades of wool coming to auction over the last week. "The season is now catching up," he said.

(BusinessDesk)

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