Friday 07 October 2016 01:26 PM
NZ wool prices mixed amid weak, volatile demand
By Tina Morrison
Oct. 7 (BusinessDesk) - New Zealand wool prices were mixed at the latest weekly auction amid targeted buying, as demand remains soft so far this season.
The price for 25-micron merino wool at yesterday's South Island auction advanced to $11.30 per kilogram from $11.20/kg at the previous comparable South Island auction two weeks ago, although it's 7 percent below the same period last year, according to AgriHQ. Coarser mid-micron wool declined, with 29-micron wool sliding to $6.70/kg from $7.30/kg at the previous comparable auction, down 36 percent from last year's level.
Meanwhile, crossbred wool advanced with fine crossbred 35-micron fibre up at $4.95/kg from $4.90/kg at last week's North Island auction, although 21 percent lower than last year. Strong crossbred wool of 39-micron gained to $4.90/kg from $4.85/kg last week, and still 22 percent lower than last year, AgriHQ said.
"Targeted buying is currently the main driving force in the market," said AgriHQ analyst Shaye Lee. "We're likely to continue to see the saw-tooth type trend happening over this season."
New Zealand wool exports in the first two months of this season starting July 1 are down 33 percent in volume and 38 percent in value compared with the same period last year, according to the latest data from Statistics NZ. Analysts say the market is being hurt by the high value of the local currency, which makes competing fibres and alternative markets more attractive. Overseas demand has also weakened in Europe and the UK following the Brexit vote and amid soft demand from China which has a backlog of processed stock with limited buying by traders of targeted wool types resulting in volatility.