China could be big wool buyer

Press, 28 March 1980, Page 3

China could be big wool buyer

PA Wellington The New Zealand Wool Board was making every effort to develop the big potential for sales of wool to China, said the board’s chairman (Mr John Clarke) at yesterday’s electoral committee meeting. The board was working with the International Wool Secretariat which had recently signed a general agreement with China to allow selected' Chinese mills to use the woolmark, he said. “Under the agreement, China will progressively increase its imports of raw wool from Australia and New Zealand.

“China’s awareness of the very high consumer and trade standing of the woolmark is the main reason for its willingness to sign the agreement,” Mr Clarke said. Mr Clarke said that the Chinese authorities had given an assurance that they would not disturb export markets by price-cutting and selling wbolmark goods at unrealistic prices. Only highest quality products from the best factories would be brought into the scheme.

New Zealand was well placed to supply the types of wool that China wanted at a time when production of carpets there was starting to outstrip domestic produc-

i tion of woql, Mr Clarke ■said. But hand-knitting was also expanding rapidly' and only a few days ago the Chinese had placed an order for a substantial consignment of scoured Shetland blends for trials. “There is a great potential for our wool there and every effort is being made to see that that potential is realised,” Mr Clarke said. Mr Clarke also said New Zealand’s returns from wool would be close to $1 billion, compared with last season’s $750 million. He said the board’s Economic Service was forecasting record production — a clip of 343,000 tonnes compared with the previous best of 334.000 nine years ago. Wool prices had maintained good levels this season. The current price of 270 c a kilogram greasy was 51c above the 1978-79 end-of-season average. Factors contributing to continuing market strength included growing demand from non-traditional consumers such as Iran, China, and the Eastern Europe bloc, and the high cost of energy with implications for synthetics manufacturers and the consumers. Even more significant was the little evidence of widespread rec&ssions in the world’s major economies as

, forecast some months ago, I said Mr Clarke. 1 During the first seven months of the present selling season there was a big increase in the amount of wool coming forward for auction. The total offering of 895,531 bales w T as 94,900 bales ahead of the same period last season. About 25 per cent of the auctioned wool would be sold by sample this season, and the natural progression of sale by sample was sale by separation, where wools held in one centre were sold at another on the basis of a sample and test certificate. Since the new futures market for wool, called the New Zealand cross-bred No. 2 contract, began trading in London in January, well over 1000 contracts had changed hands. The contracts allowed traders to make a commitment to buy or sell a range of crossbred types in 2500 kg lots up to 19 months in the future. “The board sees the new futures contract as a useful hedging mechansm for the trade and growers,” said Mr Clarke. Increased wool production was a result of increased sheep numbers—from 62.2 million last season to an estimated 65 million—and good pastoral conditions, he said.