We are now at the peak of the merino wool sale season. Global demand for fine luxury fibre continues to fuel strong prices for the excellent quality of merino wools that growers have produced this year. 

As a consequence, prices for fine wool lines are on par or close to where they sat three years ago at the market’s previous high point. One example: a line of 13.2 micron merino hogget wool from The Bend, at Patearoa Styx in the Maniototo sold last week for $81.80 per clean kilogram, or $55.30 per greasy kilogram, which was the highest value received in the New Zealand auction room for around 15 years.

It is also worth noting that, on average for comparable fine wool lines, New Zealand growers are commanding higher values for their merino wool than their Australian counterparts, which might partly be attributed to the non-mulesing status of New Zealand wool.

Meanwhile for halfbred wools, demand from the Chinese market has slipped, which is challenging values, although we have seen a slight lift in this market recently.

For crossbred wool the market continues to hold at similar levels to those seen in recent months, still well short of what growers really want, though generally slightly better than break even on shearing costs, particularly for better quality wools.

A degree of global shift may be occurring for the first time in many years: during the first three months of this financial year India imported more wool than China. Factors include China’s current power crisis, where power restrictions on Chinese mills means several not operating at full production capacity.

We are monitoring this apparent shift closely. Given global shipping dynamics, this may be the start of a market transition to manufacture closer to where product is eventually sold and used. If so, are we seeing a global shift out of China, with increased production in the United States and elsewhere? Whether or not, we have noted that the mills we deal with in Europe are currently at or close to full manufacturing capacity.

Marking another milestone, as of early September we have been offering New Zealand farm assured wool via our auction, from growers adhering to the NZFAP, established by the wool sector in conjunction with the red meat industry. This is a step forward, although noting that PGG Wrightson’s own Wool Integrity Programme continues to gain support from New Zealand growers and overseas customers alike. NZFAP will provide a generic New Zealand-wide quality assurance on origin, traceability, bio-security, animal welfare, the environment and sustainability aligned with our meat industry.