Hopes rise for hike in wool prices

Hawke's Bay wool buyers Richard Kells of Napier (left) and Philippa Wright of Waipukurau, pictured when wool prices spiked early in 2011.

Wool industry eyes will focus on Napier today, with sale prices possibly reaching some of their highest levels in the past 20 years.

Prices of the Hawke's Bay staple of crossbred wool at the last Napier sale a fortnight ago were up to 15 per cent up on the equivalent sales last year, and nudging at the prices of the peak of 2010-11 - in turn the highest in 18-20 years.

"We're not quite there, maybe 20 cents off, but it is possible," said one source yesterday.

The confidence follows steady improvements in the market over recent months, and the last two sales, at Christchurch last week and the last Napier sale, with some strong lines of crossbred lambs wool, albeit minimal and now seasonally diminishing, hitting the rock-star levels of $7/kg-plus.

The Christchurch sale last week comprised about 9800 bales, with crossbred first lambs' wool up 1-3 per cent on the previous South Island sale on May 7. At the last Napier sale there were almost 5600 bales, with crossbred lambs wool up to 6 per cent and second-shear lines as much as 10 per cent.

Today's Napier sale offers about 9000 bales and Hawke's Bay buyers were yesterday saying watch this space.

The increased prices - impacted by the seasonal limits of supply, including that of wool sold on contract and not at auction, along with the exchange rate against the US dollar - come with warnings that they have to be sustainable.

"But it is good to see the prices up a bit," Federated Farmers national meat and fibre sector chairman Rick Powdrell told The Land yesterday. "Most important is the overall trend. I'd rather see not too many major spikes, they're usually followed by major falls."

There had not been the usual dip of early year, Mr Powdrell said.

"It will be interesting to see how things go."

Central Hawke's Bay buyer Phillipa Wright said: "I think it will last but it's when the bulk of the wool comes back on the market [the higher volume months of mid-summer] that the market will be really tested."

Generally, prices have been a dollar above last year's scale, with lambs' wool even higher.

Central Hawke's Bay farmer Hamish De Lautour said it was exciting, with the crossbred wool - still 90 per cent of the market, although sometimes overshadowed by the higher value for the lesser-quantity fine wool of the merino in the south - reaping prices that were significant because of the efforts being put in place for quality.

Napier buyer Richard Kells said: "We're always hopeful. We do believe wool is edging up in popularity. But as it gets a bit higher, it gets a bit nervous."

Federated Farmers Hawke's Bay provincial president Will Foley was among those to benefit from recent sale prices, when greasy crossbred wool went to $4.70/kg, when he would have budgeted about $4.

The impacts for Hawke's Bay are seen as considerable, with higher prices meaning more on the "bottom line".

"We have an excellent area for growing good quality crossbred wool," said Phillipa Wright. "Hawke's Bay will see the benefit."