Wool News: Wool Market Update - Improvement in crossbred sale prices for first quarter
Growing demand from overseas mills has pushed up crossbred prices at wool auctions throughout February and mid-March to prices at least at pre-Covid levels. There has been a slight tempering of these increases throughout late March as overseas markets adjust to these increased values.
Crossbred wool makes up 85 per cent of New Zealand’s clip. In recent years the price of crossbred wool has fallen well short of a sustainable level, and values hit rock bottom last year during the Covid lockdown. A price reduction of between 30 and 40 per cent occurred when the pandemic precipitated serious disruption through the wool supply chain, this on values already at historically low levels. At sales this year however, values have lifted notably and across the board.
Chinese New Year celebrated this year in early February is a period we are always aware of. China is the most significant market for New Zealand wool, taking around 55 per cent of our clip. Typically during Chinese New Year wool mills shut down and manufacturers take a holiday from the market. That was not the case this year as we continued to write new business with our Chinese customers.
India has also provided vigorous market competition during recent auctions, alongside the European mills.
Although the situation is short of what we would all like, the percentage of lots passed in at this year’s auctions has been low: growers are prepared to meet the market, with a stoic level of realism around the values on offer.
Although the recent market improvement is encouraging, we still have a long way to go before growers can generate any significant enthusiasm. Global demand for wool over time is projected to continue to rise steadily as more and more consumers wake up to its characteristics as a sustainable, biodegradable, natural fibre. Returns should at least hold steady, if not continue to build. By continuing to work closely with our overseas customers, as the world wakes up to the attributes of wool that competing fibres can never match, we will support and grow our market wherever we can.
In the present circumstances growers need to remember that the best prepared, higher quality wools will continue to command a premium: vigilance in the wool shed is the key to maximising returns.
PGG Wrightson Wool