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Buyers flock to low prices at wool auction

NZ Newswire logoNZ Newswire 8/12/2016 Tina Morrison
Image of sheep © Getty Images Image of sheep

New Zealand wool prices fell at the latest weekly auction as more bales than expected were offered for sale.

Some 59 per cent of bales at the North Island auction on Thursday comprised strong crossbred wool.

The benchmark price for 39-micron wool fell to $3.90 per kilogram, which is 20 cents/kg below the comparable North Island auction two weeks ago and 60 cents/kg below last week's South Island auction, according to AgriHQ.

The price is 34 per cent lower than the same period last year and 28 per cent weaker than the five-year average, AgriHQ said.

Some 9,400 bales were offered at Thursday's auction, 2,000 bales above the anticipated roster level. The 93 per cent clearance rate was the highest for the season so far, which has averaged 74 per cent.

"Most of the sales were transacted at a lower price level," said AgriHQ analyst Shaye Lee. "It's likely the low prices coinciding with greater supply this week attracted more buyer interest."

"Buyers' appetite was towards those that meet their sourcing needs, with those fleeces not meeting their needs being discounted heavily," Lee said, noting strong crossbred fleeces with poor colour were back as much as 5 per cent from the comparable North Island auction two weeks ago.

Both fine and strong crossbred wool declined from last week, with indicators showing fine wool down 1 per cent and strong wool back 2 per cent, she said.

"In the weak price environment, those offerings that fail to meet buyers' quality specifications can be severely discounted," she said.

"Those fleeces with high contaminants, such as vegetable matter or seed content, can be marked down heavily compared with the same wool type with low contaminants."

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