Exporters optimistic about wool season

Press, 19 July 1988, Page 27

Exporters optimistic about wool season

PA Wellington Wool exporters are cautiously optimistic about the forthcoming wool export season, says the Council of Wool Exporters.

Many positive aspects of the wool market were evident, it says in a preview.

Among these are the absence of significant wool stockpiles anywhere in the world and the positive effect of the recent 12 per cent decline in the value of the kiwi against the American dollar.

Negatives aspects include the erosion of market share for New Zealand carpet wools in Western Europe and rapidly growing crossbred wool production in South American and Western Europe.

Mr Brian Sampson, managing director of G. Modiano (NZ), Ltd, Napier, said he believed there would be reasonably steady demand for most categories of New Zealand wool in the new

season. “It will not be a bull market and we will have problems with shorter wools, but the movements in currency mean that we are now getting a much better return between the prices we have been setting and what overseas mills are prepared to pay.” ’ Mr Sampson said the growing wool industries of Pakistan, India and other Asian countries were enjoying an infusion of Japanese investment in response to the high cost of processing wools in Japan. “Tops can be converted to Indian mills for less than half the cost of doing the same job in Japan. Part of that saving will go towards making processed wool more competitive in world markets.” Mr Richard Mercer, marketing manager of Maircom NZ, Ltd, in Christchurch, said there was likely to be a squeeze on the longer white hogget wools at sales early

this season. There was continued demand for these wools from China providing they were properly prepared and there were some fears that supply would be down as a result of more frequent shearing by cash-strapped farmers. “While farm management practices and financial needs restrict farmers in what they can do, it usually pays crossbred wool growers to shear against the popular trend,” Mr Mercer said. “Crossbred wools are an industrial raw material destined for a wide range of markets and uses. Prices invariably favour whatever types are in short supply in any given year.

"Right now, there is a shortage of crossbred wools in the 3in to sin range and an over-supply of wools of 3in or less.” Mr Mercer and Mr Sampson said they expected some easing in prices for the super-fine Merino wools which had

“gone through the roof” six months ago.

"It all comes down to price. Faced with huge increases in fine-wool prices, spinners and garment manufacturers will inevitably look for wools which do a similar job at a lesser price. “It may even trigger new fashions which use different wools altogether,” Mr Mercer said.

Whether this would lead to increased demand and firmer prices for Halfbred and Corriedale wools which had generally missed the fine-wool boom was “a matter for speculation,” Mr Sampson said. So far there was no evidence of such a trend. The next wool sale — the first of the new season — will be held in Wellington on July 21. Twentyone thousand bales of wools from all North Island centres will be on offer. The next sale will be of Timaru and Invercargill wools in Christchurch on August 5.