Grant Edwards joins The Country’s Jamie Mackay to look at the wool market this month.
The market dropped around 25 per cent post lockdown, and another 10 per cent in June. Mackay wondered if this was raising concerns.
Currently the international climate was in unprecedented times, with some countries still in lockdown, and this put things into perspective, Edwards said.
Recent sales in Napier and Christchurch had lifted the market, providing some potential light at the end of the tunnel, Edwards said.
Cavalier Corporation had announced it was committed to all wool and natural fibres in its carpets which was also good news, Mackay said.
In addition, Mackay highlighted from the press release, that 15-20 per cent of carpet sales in New Zealand are made from wool.
Edwards stressed there was a need to increase consumer demand and drive the wool story to the public. Mackay disagreed, saying the wool story had been around and the focus should be more on end uses and consumer products.
Edwards believed there was a need for a government body to market wool internationally from a combined industry effort. But there was a need for a robust plan throughout the industry to have the confidence to invest in this.
Edwards concluded the interview with a couple of pertinent quotes he'd found in 1950s media cuttings.
The first illustrated that concerns over natural fibres being replaced by synthetics were nothing new.
"The greatest threat to the wool industry is synthetics and crossbred wool is the easiest supplanted."
The second quote however, could offer the modern-day farmer hope for the future.
"There is no substance to the reports that synthetics could put the wool industry out of business."
As you will be aware, this year has been extremely difficult for wool.
Sales were suspended for six weeks in late March as the international wool industry set out to combat the challenges created by the COVID-19 pandemic. At the resumption of New Zealand’s market, strong wool prices were down 25 to 30 per cent on what were already record low levels prior to the crisis. Prices dropped a further 10 to 15 per cent throughout June although have more than recovered throughout July and into early August to prices closer to pre-COVID levels.
Featuring in this albeit minor recovery, all export companies are participating and bidding enthusiastically at auction. New business written out of India and China has provided the impetus, accounting for the bulk of the market. Wool deliveries to Europe have also resumed with pre-COVID existing orders flowing through the supply chain. Growers putting wool up for auction are generally prepared to meet the market at current levels realising low passing rates.
Consistent with more normal conditions, top wools with low vegetable matter content and good colour are in steady demand and achieving premium returns compared to less sought-after types. Crossbred prices, however, remain largely unsustainable given harvesting costs.
Fine wool prices are largely driven by the Australia market and have undergone a similar decline to that of crossbred wool prices here in New Zealand. Early August Australian fine wool prices are around 30 per cent back on pre-COVID levels and 40 percent back on those achieved last year. NZ growers will be watching price trends with some apprehension as we ‘kick off’ our fine wool season which runs from Late August to November. Fine wool returns to growers throughout New Zealand are being underpinned by forward contracts, which many growers have elected to take.
PGG Wrightson Wool, General Manager.