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The strong wool market will face its next test at the national auction in Christchurch tomorrow after a sudden drop below $7 a kilogram ended a dream run.
About 8500 bales are rostered for the sale and the result will command the attention of farmers and the wider industry initially wondering when a buoyant market would reach its ceiling and now nervous of further volatility.
A long run of price hikes and near full clearances extending since last August came to an end at the July 16 auction.
Average prices dropped 62c/kg from the previous sale with only 62% of the catalogue selling.
Crossbred fleece dropped 6% with good styles making $6.85/kg and poorer styles $6.35/kg.
That may be respectable when compared with the market being in the doldrums for years before the hot streak, but it is a hefty fall from $7/kg-plus just two weeks previously.
Poor second shear bales dropped even further by 10%, matched by oddments, as buyers kept their bids in their pockets.
PGG Wrightson auction manager Dave Burridge said the market had reacted to strong buyer resistance, with prices coming under pressure.
“The largest declines were seen in second shear fleece wool and oddments. Rather than the expected levelling of prices following the strong gains in May and June, the market fell sharply.’’
Mr Burridge said most European mills had been closed for the summer holidays during this sale with China and India appearing to take a ‘wait and see’ approach before placing new orders.
“The speed and volatility of these price movements are creating challenging conditions for wool growers, brokers and exporters.’’
Mid micron fleece came away relatively unscathed, dropping 2% for halfbred fleece at 28 microns to $11.05/kg.
Halfbred 25 micron fleece dropped 3% to $15.35/kg, while 30 micron fleece dipped 1% to $9.70/kg.
