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Strong wool prices are closing in on the 2011 record of $7 a kilogram as tight supplies spur on Chinese buyers to put their best bid forward.
Auction prices have rebounded since last August, to the delight of sheep farmers. Bidding reached an index clean price of $6.30/kg at the last national auction in Christchurch.
Crossbred wools were up an average 38c/kg across the catalogue — including poorer types — at the May 14 sale.
The 5100 bales were just under half the expected rostered offering and ended with a full clearance.
Whether the elusive $7/kg can be repeated this season will be played out in the remaining sales to the end of this month.
Unlike 15 years ago, when auction prices briefly touched this level only to tumble again, this market is being driven by short supplies and reduced catalogues.
PGG Wrightson auction manager Dave Burridge said the rising market had a different feel to it than previous spikes.
The lack of wool was likely to continue to the end of the season as wool supplies had diminished to levels unseen the past two generations.
"We are now heading towards the previous high level back in 2011 when there was a short period it exceeded $7/kg.
"I would be hesitant to make too many strong statements [of this being reached again], but I can say in 2011 there was still quite a lot of wool unsold in growers and exporter stock.
"This is quite different. The pipeline is bare, there is little wool coming forward."
Wool volumes were forecasted to be tight until the North Island main shear and South Island pre lamb shearing began from June/July, he said.
Rising prices were largely supply-driven as wool volumes were lower than usual for a lean period of the year.
"Over the past 15 years it is not unusual for South Island wool brokers to pass anywhere up to 20% of their wool at any one time after failing to meet grower reserves.
"What we’ve seen the past five months with the rapid rate of increased wool prices is almost 100% clearance at the auction floor."
Wool previously passed in or stored in wool sheds has since gone through the system and wool stores are empty.
Mr Burridge said wool volumes had dropped from declining sheep numbers and trends such as self-shedding sheep.
Increased prices for wool and textile fibres including synthetic fibre were being matched globally.
This gave hope the increase would be sustainable — ideally stabilising before any further lifts — as it was needed to offset shearing and production costs on farms.
Wool’s natural story was gaining momentum in overseas markets to give optimism for further growth.
The global interest for strong wool was also being shown for mid micron and merino wool.
Australian merino production had increased in the past six months, which was expected to settle a market rising 40% this season.
Mid micron prices were up by the same amount as early season clips from Canterbury and Otago reappeared from the next two auctions onwards and merino returned from late July.
The national strong wool index is up more than $2.50/kg compared with a year ago.
At the last sale good style crossbred fleece was up 7% at $6.40/kg and poorer fleece was still making $6.09/kg.
Showing the highest spike from the end of April auction was 31 and 32 micron fleece, up 9% at $6.20/kg, while 29 micron wool at $6.35/kg was up 8%.
Second shear wool ranged from $5.60/kg to $6.05/kg depending on its quality and length, while oddments were just under $5/kg.
Mr Burridge said exporters were buying wool to meet orders and there was little sign of speculative buying.
"China is going gangbusters.
"They are full steam ahead and have invested in some significant machinery and textile plant and they are open for business.
"Their internal consumption has increased ... and they are outpacing the Indians now, so we are seeing a lot more wool being exported in the greasy state whereas previously up to 75% of the wool clip used to be scoured within NZ."
Meanwhile, ASB bank has provided financial backing for Wool Impact to help revitalise the strong wool industry.
Chief executive Andy Caughey said average prices for strong wool had increased by more than $2/kg in the past year from the 100,000 tonnes of wool produced in New Zealand.
"Sustaining that increase means an extra $200 million into rural communities.
"Wool is now appearing in new categories and new uses through the work of innovative brands, investment in product and value chain innovation, and new businesses working with wool."
The bank support had come at an important time to expand new opportunities, such as architects and designers increasing wool in building interiors.