Demand pushes up wool prices

Prices for coarse wool have bounced back, rising 11 per cent higher in the past three months.

Compared to a year ago, prices are 10 per cent higher, according to the latest ASB Farmshed Economics report.

ASB rural economist Nathan Penny said one of the reasons for the increase was the lower numbers of sheep since back-to-back droughts in Australia and the 2012-13 drought in New Zealand.

‘‘There’s less wool around which is driving prices up. It’s similar to sheepmeat prices which have also risen recently because of a drop in sheep numbers,’’ Penny said.

Another driver for higher prices could be the housing industry in the United States and Australia, and the demand for carpets.

‘‘In Australia, strong population growth means a shortage of housing.

‘‘ This along with low interest rates should see housing construction continue to pick up and with it demand for carpets.

‘‘In the US, the housing market continues to recover, which should be supportive of coarse wool prices as well,’’ Penny said.