Price moves more than just the dollar, claims wool man

 “A fair chunk of what’s happening at the moment is currency related and so the farmer in New Zealand is getting a higher price on a lower dollar,” Ching told Rural News. 

“It doesn’t mean the client is necessarily paying much more.

“In some areas there is market pressure because of supply and demand. You see that in the lamb sector – last year China was asleep on lambs’ fleece. This year they came in on the first lot that turned up on the market. They were in very strongly and have stayed strong all the way through and look like they will stay here for the rest of the season on lamb – particularly to around 30-31 micron. Once you get past that it’s a little quieter.”

Fashion is driving some demand, with Shetland fabric in again this year. 

Wool of 27-30 micron is mixed with other wools from other origins to make apparel or knitting yarn and there seems to be growth in that area.

“So fashion is driving the growth, as is the underpinning of the market by the Wools of New Zealand’s Camira contract which requires quite a volume. When you’ve got one area targeted quite heavily then you naturally get this pressure.

“For one reason or another there doesn’t seem to be as much available on the market this time this year. That could be drought related and there’re several factors locally.

“The Chinese have been very active as well up to their New Year break, which they are in now for the next two or three weeks; so they did a lot of buying up to that time to make sure they had wool arriving for when they came back. That also put a bit of steam into some of your fine crossbreds and hogget types.” 

Interesting to note, says Ching, is there is no reduction in demand from Australasia and the Middle East for carpet wools. “We are surprised at that because with the price of oil having dropped so much, a lot of synthetic fibres are up to 40-50% cheaper than last year. 

“With a competing fibre being down so much on the previous year we were anticipating wool would take a significant drop because a lot of manufacturers just look at what fibre is available and what the price is and adjust their manufacture accordingly.

“Some of that has happened but not to the degree anticipated which indicates there is now this underlying demand for wool, and we’ve reached a level where it doesn’t seem to matter what happens too much with other things around us, the volume of wool that is required is reasonably static, which is positive. Maybe we have reached that plateau.” 

There are so many “wildcards” it is too soon to call it a firm trend, says Ching. But it bucks the way clients normally react.

“We have even had people place a 100 tonne order and they come back two days later and want to double it. Normally they would wait three weeks or a month.”

The double North and South Island sales held recently, with two more to go, historically can tend to put pressure on supply with more than people are prepared to take on their books. 

“That hasn’t happened and we are about to finish those double sales and then we go to on sales on alternate weeks.

“That puts pressure on the amount of wool available on the market, so we’ve got through the hump of the higher flow volume and yet we’ve got a firm market.

“But a lot is dollar related; if we had been in the mid 1980s I don’t know if we’d be saying the same things.”