Wool exporters look to U.S.S.R. and China

Press, 25 January 1988, Page 2

Wool exporters look to U.S.S.R. and China

PA Wellington Wool exporters are looking to the Soviet Union and China to take up much of the big volume of wool coming forward at auction during the next six weeks, according to the Council of Wool Exporters. In its weekly preview, the council says its members are unlikely to meet their sales targets in Western Europe this season. Although Britain and Europe are normally the destination of 40 per cent of New Zealand wool exports, knitting yarn manufacturers there are reporting very slow business.

In the carpet area, there is excess mill capa-

city and pricing is extremely competitive. Only fine cloth mills are looking buoyant, the preview says, and these source most of their sup-

plies from the merino flocks of Australia and elsewhere. New Zealand produces only small quantities of merino wools and these have been enjoying record demand during the last 12 months.

“A bright spot in the last week has been the ripple effect of recent surges in Australian merino prices,” according to Charles Hall, the managing director of J. S. Brooksbank and Company, Wellington.

“The Chinese have been buying these wools heavily in Australia and there is now an over-sold position. This means the limited supply of merino and half-bred wools available here have been enjoying higher demand and prices than we expected,” he said. Mr Hall said his company specialised in exporting to Eastern Europe and Asia, and while de-

mand for crossbred wools was down over all, smaller markets such as South Korea, Hong Kong and Taiwan had shown continuing interest. “These guys aren’t beating our doors down to buy New Zealand wool and they aren’t buying large quantities, but they are meeting the market and buying on a hand-to-mouth basis,” Mr Hall said.

“Obviously they can’t fill the gaps left by mills in Western Europe, Japan, China and the Soviet Union, our biggest customers, but their activities are a counter to the doom and gloom we hear so much about.”

The managing director of Hart Wool, in Christchurch, Mr Don Quested, said he was hoping China and the Soviet Union would be interested in large quantities of good colour second shear wools

coming forward during the next six weeks or so. China’s purchases of 7000 tonnes to the end of November last year were running at only 30 per cent of 1986 levels. But even if its purchases increased, it was unlikely to reach its 1986/87 48,000 tonne total. With world markets for crossbred wools facing a period of intense price competition, New Zealand wools were tending to be undercut by prices for synthetic fibres and by other countries’ wools, Mr Quested said.

A drop in demand for mohair had released quantities of South American Lincoln wools onto the world coarse crossbred market. These wools were formerly blended with mohair as an extender or cheapener.

He said he did not believe demand for New

Zealand wool would improve markedly unless there was a substantial fall in prices at auction. If auction prices remained constant the New Zealand dollar would need to decline to US5Bc.

“Either way, I believe the market reality is that New Zealand wool is over-priced and that ultimately farmers are going to have to accept lower prices in real terms if exporters are to get demand going again,” Mr Quested said.

The next wool sales are in Christchurch on January 28, when 27,000 bales of Timaru and Invercargill wools will come up for auction, and on January 29 in Wellington when 26,000 bales of Auckland, Wanganui and Wellington wools will come forward.

Exporters expect prices to reflect the intervention buying strategy of the Wool Board.