Crossbred wool prices showing more stability

The NZ Wool Services International market indicators for both Coarse and Fine Crossbred wools increased by 4c and 1c/kg respectively. The Mid-Micron market indicator did not manage the same as it dropped 38c/kg and is now well below the $9/kg mark again after lifting the week prior.

Crossbred prices lifted despite the fact that the NZ dollar firmed by nearly half a percent against its wool trading partners. A lack of supply will have helped to support prices with only 4200 bales on offer. But the clearance rate remains poor, with only 58% of the bales offered actually meeting reserve prices. Sale activity is low reflecting the fact that many growers just aren't looking to sell at current price levels.

Crossbred fleece wools were firm to 1.5% dearer in price compared to last week's South Island sale. The longer Coarse 2nd shear wools were generally firm to 1.5% dearer, while the shorter types were firm to 3% dearer. Overall the Coarse Crossbred wools made up over 55% of the total offering. The Fine crossbred fleece and 2nd shear market prices were fully firm and represented another 20% of the offering.

After facing continued downward price pressure since October last year it is good to see prices start to hold. But this is occurring on relatively low supplies so it's too early to suggest that prices have reached the bottom. The European crisis has been a major driver for the downfall in prices, due to a lack of buying interest especially for carpets.

Shorter wool is used for carpet manufacture so prices for shorter and medium length shear types have been hit the hardest. The longer wool types have more options in the market and this is likely to continue into the near future. The price margin between short and long wool has grown 80c to $1.20c/kg clean. Wool that has poor colour and vegetable matter are also being heavily discounted so growers are being warned to make an effort in wool preparation.

Next week's wool sale has around 7,500 bales from the North Island and 6,300 from the South Island.