Thursday, 31 July 2014 15:42

Wool leaps on short supply

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PRICES LEAPT at today's South Island wool sale driven by market shortage and strong demand, says New Zealand Wool Services International.

The coarse crossbred indicator rose 39c to $5.44/kg clean, levels not seen since late last year, NZWSI marketing executive Malcolm Ching told Rural News.
While the weighted currency indicator was back 1.17% compared to last week's North Island sale, NZWSI says that was not the driver.
Rather a limited offering combined with good demand from overseas and exporters caught in the middle with shipments to fill drove prices up by up to 10%.
"If exporters are oversold they've no choice but to pay whatever the price is [at auction] to meet their contracts."
Ching says the reduced supply is partly due to wet weather disrupting shearing patterns and partly less wool being available for auction. In turn the reason for the reduced offering is split between a smaller national flock and more wool moving direct to market or at least scours through companies like WSI and Wools of New Zealand.
"Saying that, there's still a lot of pent-up demand for New Zealand wool out there. I think these levels are likely to be sustained for some time."
A smaller than expected volume offered for next week's auction, again in the South Island, of 5300 bales, also contributed to the higher prices. The next North Island sale is on August 14.
In a 96% clearance of today's 8300 bale offering, mid micron fleece was 7 to 11% dearer, fine crossbred fleece 5-7% up, and fine crossbred shears 7-10% stronger. Coarse crossbred full fleece was 4.5-6% firmer.
Longer coarse shears lifted 7.5-8.5% while 3-4 and 2-4 inch shears gained 10-12%. Shorter shears were up 2% but oddments rose 6-10%.
Well spread competition with China, Australasia and Western Europe principals, supported by India, Middle East and the United Kingdom.
Next sale on 7th August comprises only 5,300 bales from the South Island, down 38 percent on the rostered volume.

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