Wool prices fall in first auction of 2017

Wool prices at this week's auction fell, particularly for varieties sourced from the North Island. Photo / NZME.

New Zealand Wool Services, the country's largest wool exporter, says prices at this week's wool auction fell, in particular for varieties sourced from the North Island.

Compared to the previous North Island selection on December 21, 2016, fine crossbred fleece and shears were firm to 4 per cent cheaper, coarse full fleece was 3 to 6 per cent cheaper with shears firm to 5 per cent cheaper.

First lambs fleece were firm to 5 per cent cheaper with coarse long oddments up to 7 per cent stronger and short oddments 7 per cent cheaper.

The South Island auction saw prices hold better, with fine crossbred fleece and shears firm to 3.5 per cent cheaper, coarse fleece firm to 1.5 per cent cheaper and second shears generally firm. Lambs fleece were 3 to 5 per cent firmer with coarse oddments firm to 4 per cent dearer.

Restricted activity was reported with manufacturers from China, Australia and western Europe.

Shaye Lee, an analyst at NZX Agri, said in a note that high supply was meeting a relatively soft market.

"Prices for fine and strong crossbreds generally trended down, with high supply, soft demand, and the strong NZ currency being limiting factors to the market," Lee said.

"Lamb wool generally traded at a 43 per cent discount on a year ago level. Both fine and crossbreds are still under downward pressure - fine crossbreds generally traded at a 35 per cent discount on year-ago prices."

Industry data from Beef and Lamb New Zealand for July to September 2016 shows wool exports were down by around a third compared to the same period in 2015.

This is partly due to sharp gains in the value of the NZ dollar, in particular against the British pound following the vote by the UK to leave the European Union.