Market improvement for wool

Press, 13 June 1986, Page 10

Market improvement for wool

PA Wellington The wool market made a significant recovery during May with prices reaching a seasonal peak and Wool Board stocks falling dramatically, the Board said in its latest market review. After a slow start, the 5 per cent fall of the New Zealand dollar against the U.S. dollar in mid-May created a flurry of new activity in the wool market reactivating trade interest and lifting wool prices by up to 15 per cent in some categories. By May 22 the market indicator had reached a high for the season at 496 c per kg clean, the board said.

The rapid climb in prices in part reflected the fact that the market had been oversold with insufficient wool available at auction to meet export commitments.

Raw wool stocks in the hands of exporters and merchant scourers were

also well below normal end of season levels, adding to supply and demand pressures.

Strong competition for New Zealand wool during May resulted as buyers who had been holding off hoping for more favourable prices finally ran out of time and competed to meet commitments previously made. The strong demand for New Zealand wool resulted in a dramatic reduction in board stocks after months of steady increases.

Sales of nearly 29,000 bales during May far exceeded board purchases and reduced board stocks to the lowest level in more than six months. With Australian coarse wool supplies almost exhausted through to the end of September, prospects for the majority of New Zealand wools continued to look favourable, the board said. The weakening of the

U.S. dollar against most other major currencies was a further factor in the wool market upsurge during May, activating an increase in both the New Zealand and Australian wool markets.

The quantities of short wool which were a feature of last month’s offerings continued to be in greater supply than usual, due in part to live sheep shipments. Over 110,000 bales of new season wool were sold in May, bringing to 1,479,031 bales the amount of wool sold in the season to date. This compares with 1,639,235 bales for the same period last season.

The market indicator opened at 450 c per kg clean and moved steadily upwards to peak for the season at 496 c after the New Zealand dollar began to fall. It closed at 495 c, up 47c on April’s close, and 4c above the previous

491 c high for the season in December.

Prices for all wool types increased significantly during May, some by as much as 15 per cent. Fleece and lambs wools increased from 5 to 7.5 per cent, second shear by a full 10 per cent, and oddments by 10 to 15 per cent.

After a slow start to the month, competition had become widespread by mid-May, with strong support from China, Eastern Europe and New Zealand merchant scourers, sup-

ported by Western Europe and Japan. China was particularly active, with five buying delegations in New Zealand over the month showing strong interest in better length second shear wools.

The Chinese may be departing from their usual practice of waiting until the new season and placing orders now for the start of next season. The U.S.S.R. continued to be a significant force in the market during the month, despite its ongoing hard currency problems.