China fills hole for wool sales

Demand from China should ensure wool growers have a steady market for their wool in the first few months of the new selling season, says the Wool Exporters Council.

In a market preview before auctions on Thursday, August 19, council president Peter Crone said sales to China in the first half of 1999 were down, but quota had finally been released to Chinese mills after top-level political intervention in both China and New Zealand.

He said Chinese demand was traditionally limited at this time of the year and there was also a hole in the market until European buyers returned to work after their summer holidays.

However, the market was now seeing demand from China for prompt shipment and for forward sales through to September.

"This will help underpin auction prices until Europe comes back on stream," Mr Crone said.

He said Chinese demand was limited by finance and by the realities of world textile markets, but was sufficient to sustain the market at a time of limited supply.

"This is not just a seasonal matter. New wool supply on both sides of the Tasman has fallen dramatically in the last 10 years.

"In Australia, something like 20,000 farmers have dropped out of the industry in that period," he said.

He did not expect sales from the Australian wool stockpile, at about 15,000 bales a month, to have much effect on prices for good quality new season's wools.

The next auction sales are in Napier (10,400 bales) and Dunedin (10,000 bales) on August 19. The only other sale this month will be in Christchurch on August 26, with 15,500 bales of Canterbury and Southland wools on offer. Mr Crone said exporters were concerned that if the present wet weather continued, shearing would be delayed and these rostered quantities might not be available.