Situation and outlook for New Zealand agriculture and forestry (August 2007)
12 Wool
Farm gate prices for fine and mid micron wools improved in the year ended 30 June 2007 year compared with prices in the previous year, while crossbred prices remained static. Despite this, once inflation is accounted for, average wool prices are at their lowest levels in over 45 years. The demand for crossbred wool fell due to improvements in synthetic carpets.
Farm-gate wool prices are forecast to increase due to stronger international prices in the year ending 31 March 2008 and a falling New Zealand dollar after that year.
A 24 percent increase in export prices for fine wool in the year ended 31 March 2007 was largely driven by supply shortages caused by the Australian drought. An 8 percent fall in shorn wool production in Australia is expected for the year ended 30 June 2007. This is expected to support prices for fine wool to a greater extent than those for mid micron and crossbred wool.
Prices for New Zealand wool on international markets are forecast to increase in the year ending 31 March 2008 due to the ongoing impact of the Australian drought on the international supply of wool. Further out the forecast depreciation of the New Zealand dollar against our main trading partner currencies is expected to be the main contributor to the increase in prices.
QualityThe price premium New Zealand wool has commanded for its whiteness, strength, and low vegetable matter is being eroded. A wider range of sheep breeds used for meat production has increased the contamination of white wool with black and dye-resistant hollow fibres. The fibres are shorter and weaker. Farmers are also taking less care in preparing their wool for sale. |
Exports
The volume of wool fibre exported in the year ended 31 March 2007 remained static compared with the previous year (see Table 12.1), but the value increased 3 percent. During the year ended 31 March 2007, 155 000 tonnes of wool fibre was exported at a value of $686.6 million dollars (see Figure 12.1).
Table 12.1: Wool export prices and volumes
| Actual | Forecast | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||
| Average sale price1 (cents/kg) | 469 | 405 | 366 | 368 | 389 | 429 | 460 | 482 | |
| Export volume2 (000 t) | 146 | 147 | 155 | 155 | 155 | 152 | 149 | 148 | |
Notes
1. Year to 30 June, 2007 figure is estimated.
2. Year to 31 March.
Source Meat and Wool New Zealand, Statistics New Zealand and MAF.
Figure 12.1: Wool export volumes, by micron group, year ended 31 March 2007
Source Statistics New Zealand.
The European Union remains the major destination for New Zealand wool exports, accounting for about 40 percent of export wool volumes (see Figure 12.2), with the United Kingdom, Italy, Belgium and Germany being the main individual markets.
The single largest individual market for New Zealand wool fibre continued to be China. It is now the main market for all three main micron groups (crossbred, mid micron and fine) surpassing Italy as the main export market for New Zealand fine wool in the latest year.
Wool export volumes are likely to gradually decline over the forecast period in line with the forecast fall in production due to declining sheep numbers.
Figure 12.2: Wool export destinations, by value, year ended 31 March 2007
Source Statistics New Zealand.
Production
Wool production for year ending 30 June 2007 is expected to be slightly lower than that in the year ending 30 June 2006.
Over the forecast period, wool production is expected to gradually decline. This is in line with the forecast decline in breeding ewe numbers as farmers move from farming sheep to beef and dairy cattle, which have proved to be more profitable in recent years.
Contact for Enquiries
Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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