Wool market affected by stronger dollar

Press, 17 December 1986, Page 40

Wool market affected by stronger dollar

PA Wellington The wool . market opened firmly last month but soon became uncertain as the New Zealand dollar • strengthened, the Wool Board said. Further unpredictability was caused by the continuing shortage of new clip wool at some centres this season. With the trend towards earlier and more frequent shearing patterns and delays in shearing caused by wet weather in some regions, auction offerings in some centres were again below rostered quantities. While wool prices generally stayed high, the record prices of the previous two months eased up to 2 per cent over the month, rising only slightly at the last sale after the New Zealand dollar dropped suddenly, the board said.

Fine wool offerings, particularly at Dunedin and Timaru, were generally well grown, of good colour and in excellent condition.

However, the Christchurch catalogue was not up to the standard of earlier offerings, with more water discolouration and vegetable fault. Crossbred short hogget wools at Dunedin and Napier were also in good condition, but mature wools were disappointing for this time of the year with water discolouration and shed stain, reflecting the lush spring growth of past weeks, the board said.

Over all, the selection

comprised fleece wool, 53 per cent, second-shear 22 per cent, bulky skirtings 9 per cent, and crutchings and clothing oddments 6 per cent. In November, 164,392 bales of new clip wool, 11 per cent down on original rostered quantities, were offered for sale.

Total auction disposals for the season so far were down 2758 bales (less than 1 per cent) compared with the same period last season at 472,240 bales. The November market indicator beat the previous all-time high of the last two months, opening at 553 c a kilogram clean (411 c greasy) —- up 9c from the close of October. However, prices eased during the month, with the indicator falling to 537 c a kilogram clean (399 c greasy) before rising again in line with a weakening kiwi dollar to close the month at 540 c clean (402 c greasy). During November the fine wool sector benefited from the strength of the Australian market, with extra-fine Merino wool gaining between 2.5 per cent and fully 5 per cent and other fine fleece wools up to 2 per cent.

Prices for most other wools eased during the month, with coarse crossbred fleece and secondshear up to 2.5 per cent cheaper. Prices for crossbred bulky skirtings and oddments fluctuated between centres but generally declined up to 2.5 per cent. The keen and wide-

spread competition of early November sales became more restricted by mid-month as the value of the local currency strengthened. The market was generally supported by the need to cover forward sales for pre-Christmas delivery at a time when crossbred wools were scarce. . The market was dominated by China and Russia, especially on fleece and second-shear wools, while useful suport was given by Western Europe, Japan and New Zealand mills. The Wool Board became more active in supporting auction ■. prices during November, with its price levels rising as the currency weakened towards the end of the month.

Some readjustments were also made to give growers the best possible returns for well-prepared wools.

The board supported the fine wool sector, especially Merino, and better style and length crossbred wools. In total, the board bid on 27,182 bales (16.5 per cent of offerings) and bought 7847 bales (4.8 per cent). The continuing shortage of new clip offerings caused a high turnover in board stocks, both at auction and privately, with board stocks down 50 per cent from the season’s opening levels. Sales of 15,949 bales during November reduced board stocks provisionally to 62,626 bales. With strong demand, the Australian market continued to strengthen during November, and had the highest trade clearance rate of the decade.

Japan, China, Russia and Western Europe continued to dominate the market, the board said.

Prices for 18 micron fleece rose up to 10 per cent, 19 micron 5 per cent while 20 micron wools were slightly cheaper. After opening strongly, prices for 20 to 23 micron eased to close in buyers’

favour; while 25 micron and coarser fleece wools were in sellers’ favour. 32 micron and coarser fleece wools eased over the month to close in buyers’ favour. Australian Wool Corporation purchases totalled 1.2 per cent of offerings during November (4835 bales). Total stocks at the end of the month were 941,437 bales, down 63,830 bales from the start of the month and 192,972 bales lower than the same time last season. The home trade in Bradford was still lagging behind the wider recovery in the international wool market New business remained slow and patchy, and short-time work was fairly commdn especially in machine-knitting and other-sectors. Competition at the Bradford sale was generally keen and well-spread and prices for scouring fleece and second shear wools increased 2.5 to 5 per cent and skirtings by fully 5 per cent. Offerings were crossbred fleece, 54 per cent, oddments 12 per cent and second-shear 11 per cent The Bradford sale was given strong support from the New Zealand Wool Board. The board bid on 754 bales (33 per cent) and bought 193 bales (8.4 per cent).

Prices in the South African market were erratic but generally saw increases, the board said. Prices for best length and style 20 micron fleece wools rose fully 7.5 per cent while 21-23 micron wools maintained their price or increased up to 2.5 per cent

The arrival of a Chinese wool-buying delegation in South America caused some hectic trading during November and significant increase in prices which advanced almost daily. However, despite internal increases of around 10 per cent prices in South America still remain significantly below comparable New Zealand wools.