Wool up, dollar drifting higher

Prices at last week's South Island wool sale rebounded after a month of uncertainty.

There was a small volume of wool and prices lifted up to 4% across most categories.

There was strong demand for oddments and sound crossbred fleece, Roger Fuller, of CP Wool, said.

A small offering of lamb's wool resulted in "extreme'' prices, in some cases, depending on micron, Mr Fuller said.

New Zealand Wool Services International chief executive John Dawson said steady buying interest from Australasia and Western Europe was underpinning the market, particularly for better prepared wools.

ASB's latest Farmshed Economics report said strong wool prices continued to "fly under the radar''.

Although down from a recent peak in September last year, prices remained high by historical standards.

Coarse wool (39 micron) prices were about 27% higher than the 10-year average.

Tight New Zealand supply continued to underpin wool prices. Beef + Lamb New Zealand estimated production would decline by 2.4% over the 2015-16 season, compared with the previous season, and supply remained similarly tight in Australia.

However, the strong New Zealand dollar had taken some of the gloss off prices in recent months.

The bank's economists expected prices to "bobble around current levels'' over the next six months.

Continued tight supplies should support prices but, at the same time, the dollar was expected to drift higher, negating some, if not all, of supply effect.

A range of prices from the South Island sale. - Hakataramea Station (Hakataramea Valley), 28 bales crossbred two-tooth, 36 micron, 81% yield, 470 greasy, 580 clean; J.

D. Tweed (Otago), 14 bales crossbred second-shear, 36.6 micron, 80.4% yield, 478 greasy, 594 clean, five bales crossbred lambs, 28.5 micron, 80.9% yield, 576 greasy, 712 clean; Goodwood Heights Partnership (Otago), five bales crossbred lambs, 28.6 micron, 77.5% yield, 555 greasy, 716 clean; Pinegrove Farming Ltd (Otago), 12 bales 29.3 micron, 76.9% yield, 535 greasy, 696 clean; Oakhill Station (Otago), four bales halfbred lambs, 22.4 micron, 72.2% yield, 760 greasy, 1053 clean.

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