After much of the world went into lockdown due to the pandemic, prices for all types of wool dropped by between 35 and 40 per cent. Since July we have regained most of these losses. Values however remain volatile with a recent appreciation of the NZD not aiding this recovery. Initially that was driven by India, the largest worldwide producer of rugs, while China, which is always a dominant player, was subdued at first, before becoming more active recently as Chinese manufacturers begin restocking their wool pipelines.

Covid-19 has created significant challenges during these unprecedented times. There is no escaping the fact that at the end of the supply chain, wool and wool products are predominantly sold on a retail basis. When retail outlets are open, the pipeline can operate. However, during a lockdown, that becomes impossible, creating serious challenges for manufacturers and others in the supply chain to navigate.

Since the crossbred wool market is driven by supply and demand, as Christmas approaches we tend to experience a price lift, partly due to the fact that at this time of year we have lower levels of supply and orders tend to come due pre-Christmas. From December to February, however, more crossbred wool will come onto the market. How well it will sell, particularly as the pandemic continues to affect many aspects of life overseas, is difficult to predict.

What we do know is that even with the recent recovery, for most growers crossbred wool prices remain well short of acceptable. Further significant improvement remains essential. Until the world enters a post-covid equilibrium, it is difficult to forecast when such a price lift will occur. What we do know is that wider social trends over the past few years, particularly relating to consumer behaviour on ethical grounds, are on our side. As long as those re-commence, or even accelerate once the ‘new normal’ arrives, crossbred wool growers stand to benefit.

Grant Edwards,

General Manager, PGG Wrightson Wool.