Raw wool samples on display for buyers to peruse at the PGG Wrightson wool store and auction house. Photo / RNZ, Monique Steele
By Monique Steele of RNZ
A new national wool auction, closing a chapter for Hawke’s Bay, was off to a subdued but promising start in Christchurch this week.
The hammer went down on more than 9000 wool bales sourced from across the North and South Islands on Thursday, earning $6.6 million across two auctions held by brokers PGG Wrightson (PGG) and farmer co-operative Wools of New Zealand.
More than 4800 bales were sold by PGG, making $3.4m, while Wools of New Zealand sold more than 4300 for $3.2m.
PGG held its final Napier auction in mid-April after 140 years there, as the rural firm sought to consolidate and reduce duplication across the auction system. Wools of New Zealand followed suit.
General manager of wool for PGG Rachel Shearer said the support team of 20 in Napier, whom she described in January as “disappointed” by the decision, was expanding to help manage the new Ōtautahi auction.
“The decision to consolidate to Christchurch has been really difficult,” she said.
“It’s been a long time coming, and we’ve been hearing from buyers for many years, as well as the wider industry, that there’s a lot of duplication happening across the industry.
“Part of our strategy is to work with others across the wool industry to help consolidate, to take out that duplication in the industry, to create efficiencies.”
Small, raw samples of North Island-sourced wool will now be shipped down to Ōtautahi for buyers to experience in the wool store, instead of the full bales, and scouring and storage will continue in Napier.
Shearer said growers either entered wool supply contracts, sold it directly or through auctions.
“Growers have options, and we’re delighted to be able to offer them multiple options,” she said.
“We believe in the open cry system; it’s fast, it’s reliable, and buyers like it. But likewise, growers are able to promptly receive money for that.”
South Island auctioneer Dave Burridge said the firm wanted to create an “industry-good” hub in Christchurch, possibly with more players involved.
“There’s a lot of collaboration that has gone on with other brokers to be able to come together in one centre,” he said.
“And there will be other support and options for other brokers to come in eventually, if they wish to be able to support the auction system.
“Because ultimately at the end of the day, the auction still sets the defaulting prices in New Zealand.”
Nearing the end of this current wool season, there were fewer bales on offer in Ōtautahi than at this year’s earlier North and South Island sales combined. But there was good buyer turnout and low pass-in rates.
Local buyers and agents represented companies from all over the world, including key markets – China, Australia, and Europe.
Among others, the top buyers across Thursday’s sales were longstanding merchant Segard Masurel and the consolidated JS Brooksbank and NZ Wool Services International, New Zealand’s largest wool exporter.
Burridge said most of the bench were based in Christchurch, but there were other exporters scattered around the country too.
“What happens generally is that the New Zealand-based wool exporters will represent overseas principals of their inquiry, their demand and their purchasing books,” he said.
“But we do have a number of, in recent years, a lot of interest now coming from Australian major wool exporting houses, sending their representatives here to Christchurch, mainly through the fine wool season.
“They’ve also expressed interest now into the cross-bred sector, which we see ... as hosting a hub for all buyers to make it accessible.”
Burridge said prices were well above the levels of recent years, closer to the more recent pre-Covid 19 era peak around 2018, making it much more meaningful for growers.
Prices appeared to have turned a corner after difficult periods when the cost of shearing the sheep outweighed returns.
Burridge said prices were helped in part by improved sentiment in China recently.
“It’s mainly been a supply-driven, but it’s also come at a time where China has revitalised.
“They’ve invested a lot of new plant and machinery in China to process wool as the textile hub of the world.”
He said there was promise for New Zealand wool with the signing of the new India-New Zealand free trade agreement just this month.
He added that the current global uncertainty around oil could favour the wool industry over petroleum-based synthetic fibres.
Demand for traditional wool mediums like carpet, textiles and clothing was holding steady, but there were emerging opportunities in more niche products like woollen air filters, wool-derived pigments and woollen band aids, helping prices.
Cross-industry platform Fusca indicated its strong wool indicator was at $5.54 per kilogram on Thursday, marking a 10-year high.
Though some classes reached much higher levels in Napier and Ōtautahi recently.
Prices have been helped in part by steady domestic and international demand for wool, in the face of the declining national flock.
The 23 million or so sheep in New Zealand in the year to June, according to StatsNZ, was now a third off the peak of more than 70 million in the 1980s.
In future, a couple of cents per kilo may be shaved off the sheet further to go towards an industry wool levy, which was being considered again.
In 2003, farmers dissatisfied with the then New Zealand Wool Board voted out its governance and hence the levy, and attempts at a levy revival since have been unsuccessful.
Organisers expected the quantities at national auctions to increase as more wool came off farm in the warmer months, with a boom expected in July and August, particularly for merino.
- RNZ