Despite the challenges the wool industry is facing, Campaign for Wool chair Tom O’Sullivan is confident that better days are on the horizon.
Like its region of venue in Hawke’s Bay, the latest North Island wool sale was shrouded by a dark cloud with a noticeable drop in pricing.
Crossbred fleece took a deep dive at $2-$2.81, falling up to 13%, with second shear crossbred wool at $2.30-$2.71, down 15%.
Lambs’ wool at $3.23 for 27-29 micron was back an average 4% and 31.5 or more micron at $2.94, down 3%.
There was also a noticeable drop off in pricing at the previous South Island sale in Christchurch.
Unfavourable currency movements, combined with growing costs to get bales shipped, weakened buying intensity.
A lack of Chinese buying, potentially tied to the current lockdowns in China, is also impacting on New Zealand wool sales, with medium and poorer-quality coarse fleece trading at the lowest since early winter last year.
Lambs’ wool is also undoing much of the traction it gained earlier this year.
“It seems the pressure from overseas is now really hitting home, with some wools finding it hard to obtain any interest,” PGG Wrightson Wool North Island auctioneer Steve Fussell said.
Unfortunately, he said there is no reason to believe the situation is going to improve any time soon.
Traders are getting a bit full with poorer-type wools and there’s still lambs’ wool sitting around from this time last year.
“It’s hard going and there’s some big players missing on the bench,” he said.
China in particular is conspicuous by its absence, with a couple of key buyers missing as Europe and India underpin current buying.
“While Europe has been great, that has helped, and India has picked up a lot of the slack, that’s good, but it’s not enough,” he said.
Going off export statistics, China has only taken 16% of the strong wool in the December to February period compared to the normal 17-23% in the past five years.
In the same period India has picked up a 23% share, compared with 12-17% in recent years.
China has remained dominant in fine wool exports, retaining a 59% market share in terms of revenue ahead of Australia, 12%, and Italy, 10%.
Fussell said this wool season has also been marred with coloured wool.
“We would have had the worst year for coloured readings in the past 10 years. We have seen a year of coloured wool and that hasn’t helped as there’s only so many homes that can go to,” he said.
Much of that comes back to the season.
“There’s been too much (pasture) growth, the weather too moist and the ewes just don’t move about so there’s no drying,” he said.
On a more positive note, the Campaign for Wool (CFW) has released its annual report looking back on the past year with confidence.
“We have had a busy year building our strategy and focusing on our top four priorities – communication and education; digital advancement; insight development and strengthening partnerships, ‘’ chair Tom O’Sullivan said.
CFW shared its strategy in September 2021 with activity to be implemented over 12 months.
“With only three months of activity in this report, we have already made some fantastic progress – we are now looking and working on our long-term global strategy,” O’Sullivan said.
“We have been working closely with our partners to build our assets and create data-driven insights about how wool is perceived and used in key international markets.
“This is gaining traction in NZ and bodes extremely well for us to launch our global strategy.
“The trick is to talk to the right people in the right way to create a groundswell of demand.”
Looking ahead, CFW knows that a long-term global strategy for wool is critical
“We are working on transitioning from our NZ growth asset focus to that of a global strategy focused initially on primary markets and then out to secondary markets and beyond,” he said.
Meanwhile, Wool Impact NZ, the new service delivery model to drive NZ’s strong wool sector growth is on target for its scheduled July 1 launch.
The result of the Strong Wool Action Group’s (SWAG) project, the purpose of the new entity is to facilitate innovation, support demand growth and enable a unified voice for strong wool in NZ, to grow existing and generate new demand for strong wool consumer brands, products and services.
Chair Rob Hewett says Wool Impact’s ability to engage with and support other industry stakeholders will be critical.
The announcement of the six-member Wool Impact board, recruited on skill-based specialisation across key management areas, is expected in the next two weeks.
In the meantime, Hewett says confirming both industry and government funding is ongoing.
Over the three-year transitional period government funding is budgeted to come in at 40% of the forecast $3.8 million a year, with industry and other commercial participants covering the remaining 60%.
