Lower wool prices likely this week

Press, 19 August 1985, Page 4

Lower wool prices likely this week

PA Wellington Financial forces are expected to tighten their squeeze on prices at Christchurch wool sales in Christchurch on Thursday and Friday this week. The Council of Wool Exporters, in its weekly market preview acknowledged serious difficulties in strengthening market performance in the face of high, and rising, interest rates and the continuing volatility of the New Zealand dollar. Total wool on offer in the two Christchurch sales will be 41,700 bales, down from the rostered 53,000, as the effects of the South Island droughts begin to bite. The original estimate for Timaru area wools was 12,000 bales; actual offerings are 4,700.

Christchurch sheepfarmers have presented 20 >er cent less wool at 10,000 jales. .Recent estimates of South Canterbury and North Otago wool production have failed to establish firmly any likely trends for the season.

Indications are that farmers may produce close to 30 per cent less wool in the region. But as many

farmers still face the possibility of killing capital stock, those figures could be even worse.

The shortfall might be a blessing in disguise for the industry, the preview said. New Zealand fine wools (30 micron and down) are at the moment between 15 and 20 per cent dearer than Australian equivalents. At that rate they are not attracting buyers on the international market.

Mr Kieran Doherty, from Westwools, said European customers were about 40 per cent down on their purchases to date for this stage of the season.

“We have to remember that last year, exporters sold all the season’s clip plus a substantial amount from the Wool Board stockpile. It would seem that there may be more wool still in stock in Europe than we realised.”

Auction prices so far this season have been boosted by exporters bidding to fill presold contracts. Consensus among exporters indicates that these orders will probably have been filled and that any buying will be for contracts entered into recently at present prices. The New Zealand woolgrower can expect to see

the full effects of the international currency market movements start to show in this week’s auction price. The Wool Board is expected to be a big buyer in Christchurch. This present international financial climate is aggravated by a limited demand from overseas markets and exporters see little demand. And a reduced national wool clip (estimated to be down between 1% and 2 per cent) might be softening downward pressure on market prices, the preview said. Many exporters said the floated dollar had complicated their marketing.