By Rob Cochrane, wool procurement manager for PGG Wrightson Wool.
Wool flows from farm into broker stores across the country were slower than anticipated throughout January and into early February, due to several factors including weather interruption in late December, and a general lack of shearers and wool handling staff.
However with crossbred wool values not held in high regard for many sheep farmers, grower apathy was most likely the main driver as other jobs on farm took precedent over loading wool bales onto freight trucks.
To be fair though, larger wool producers, facing hefty shearing bills, were (and always are) diligent in forwarding wool bales to their designated selling broker for processing and sale, to reduce the impact of the shortfall between harvesting costs and wool sale receipts.
January offered five opportunities nationally for growers to sell wool via auction with an original roster set for forty-six thousand bales to be catalogued.
A double sale (when both North and South Islands hold an auction on the same day) held on January 13th saw around sixteen thousand bales catalogued resulting with approximately 91 per cent of bales in the north and 72 per cent in the south, cleared to the export trade. With South Island broker catalogues containing a wider range of breeds and wool types compared to those of the North Island, along with market prices for mid-micron wools having struggled in mid-December, it was not surprising that passed-in rates were high in Christchurch as growers opted to hold their wool over for later sale opportunities.
When wool auctions ceased for the Christmas break, market prices had eased in the face of low demand from Chinese mills along with shipping and other global transport challenges.
Whilst wool brokers are generally ultimate optimists, most were unmoved when the market did ease on January 13th. And with weekly sales scheduled for the Napier auction centre throughout January and early February to cater for the (usually) high seasonal volumes, plus Christchurch selling on alternate weeks, expectation was for the market to ease further.
And, as earlier eluded, it did ease, despite actual volumes being considerably less than originally forecast.
Interestingly, the latest auction held in Napier at time of writing, on 20th January, enjoyed a slight upwards trend in prices, driven mainly by continued demand from European mills and minimally assisted by a slightly weaker Kiwi dollar, with the market quoted as “sellers’ favour”.
Often in the January/February period there is talk within the wool trade surrounding Chinese New Year celebrations and holidays after which new purchase orders may be forthcoming. The recent lack of demand from China has clouded the outlook somewhat this year and whilst celebrations there begin from around February 1st for a week, it’s unsure if demand is likely to improve after then.
European, Indian and Australasian mills appear to be the major players as we move forward. Several European and Scandinavian manufacturers in particular recently indicating that their 2021 year was extremely busy with sales of woolen products, both for apparel and interior textile products, and no doubt having cleared some of the backlog, there are definite positives out there.
The next few months bring with them wool quality issues due to growing conditions experienced and although many growers can’t see much benefit in taking care with wool clip preparation, given the high cost of harvest versus low wool returns, this is exactly when extra care should be taken to protect the reputation that New Zealand crossbred wool is the best in the world. It still is!
That’s my view.
