Wool prices back again

Press, 9 May 1980, Page 10

Wool prices back again

Woo! prices are never static for very long. There has been a significant turn-round in prices again. After what has been termed “an Indian summer” of high prices they have come back to what the same source calls "reality.” That weird and wonderful thing called the. average weighted adjusted sale price which puts every sale on the same basis has dropped back from a high point last October in Christchurch at more than 291 c per kg to just over 242 c at Timaru and Napier last week —■ a decline of about 17 per cent. Levels now are about those ruling in the early stages of the season.

There are plenty of reasons for the recent downturn — the extra weight of wool that has been taken up since the season

began (up 13 per cent at the end of March), .the increasing cost of money as interest rates climb, which can only accentuate a hand-to-mouth operation on the part of manufacturers and the trade and difficulties in getting wool to Iran, where there is reported to be an inquiry at above present market levels. The downturn has caused the Wool Board to move away from its strata price control system of market support to bolster up weak spots in the market to its intervention system, where it is now supporting the market at a specific level to stop it going any lower meantime. It is, however, a flexible mechanism and can be adjusted if the board sees fit. It has resulted in the board starting to build up

its stockpile again with purchases, and late last week it was holding about 80,000 bales which is similar to its position at the opening of the season. There are some who say that the board could well hold this position until the end of the season, which is next month. There is still a measure of optimism about the course of future prices, and there are those who see a recovery in the market again on the cards in the next few months. One of the reasons for that is the relatively reasonable or cheap level at which wool is now priced. There are not many commodities that get cheaper. For the farmer selling at the new prices, faced with ever-increasing costs, the downward movement is not a very welcome one.