Spike of confidence in wool market prices

Wool traders are hoping a one-sale price spike for carpet wools signals the end of a year-long slide in returns.

Strong wools improved 4 to 10 per cent across a range of types at last week’s sale.

The combined North and South Island offering comprised 13,900 bales and saw a 79 per cent clearance, the highest sale rate this season.

Prices for the coarse wool styles used in carpets are now $3.40-$3.50 a kilogram for unstained 7.5-10 centimetre ( 3- 4 inch) second shear scoured wool and $3.55-$3.65 a kilogram for 10-15cm(4-6 inch) fleece.

This is down almost half on peak prices a year ago but up 25 per cent on two years ago.

H Dawson Wool senior trader Craig Smith said last week’s rise was due to three factors.

‘‘It is the last time for a while that we will see goodcoloured carpet shears from the North Island. With all the wet weather, and more to come, the colour won’t be as good.

‘‘So, buyers were keen to stock up.’’

Other factors were that prices had now fallen to a point where they were attractive to overseas mills and that European buyers

trad’er –Craig Smith, senior were returning to the market after their annual holidays.

‘‘It was good to see that spike in the market.

‘‘We hope it won’t take off again and scare off our customers overseas.’’

The rise of 2010 was ‘‘too hot’’, he said.

Then when the economic downturn hit, manufacturers and retailers had stocks they couldn’t shift.

That backlog had slowly been moving over recent months and New Zealand buyers were now receiving increased interest.

Rain throughout the country and a two- week wait till the next sale would help keep prices up.

‘‘The colour will deteriorate and many farmers are into lambing, so there could be a shortage of goodcoloured carpet wools around, specially the second shear.’’

At last week’s sale, the wool went to China, India, the Middle East, Britain, Western Europe and Australasia.

Smith said it was too early to say if Prince Charles’ Campaign for Wool was having any effect on the market.

How fine wool would do this year was anyone’s guess. Australia had started its season down but New Zealand had promises of extra interest from Asian clothing manufacturers.

‘‘It’s hard to know what the market’s going to do and what direction it’s heading in,’’ he said.

It was a problem throughout the fine wool value chain. Buyers were not purchasing stock until they had sales, product makers had to clear their stock before buying the fabric and fabric makers had to then buy the wool type.

‘‘No-one is going into a stocking position at the moment because it ties up too much cash,’’ he said.

People were not buying premium products such as fine wool suits and inquiry in Europe was also down by about 50 per cent from last year.

‘‘ It’s just a very tricky market.’’