Whether escalating strong wool prices have reached their ceiling will be revealed at the next South Island auction as the focus also centres on bidding for Central Otago bales of ultrafine 13 micron merino wool.
One of the main wool exporting firms has signalled it is coming from Australia for the February 26 auction, with the usual crossbred offering coinciding with an end-of-season fine wool sale.
A small but valuable catalogue of 400 to 500 merino bales is expected to be lined up, ranging from ultrafine to 21 microns.
This will include late wethers shorn throughout the South Island among the 8400 bales to be sold of mainly crossbred fleece as well as 100 bales of mid micron from 21 to 30 microns.
An influx of Southland crossbred fleece from the summer shearing of ewes is a feature of the dominant strong wool offering.
Strong wool prices rose across the board about 10%, up 47 cents a kilogram, at the last South Island sale in Christchurch on February 12 in a rapidly rising market so far this year.
PGG Wrightson South Island sales manager Dave Burridge said the attendance by the Australian exporters was another indication of the global wool shortage for merino wool.
In 2024 John and Sam McAtamney from The Bend near Patearoa set a record for 12.5-micron merino wool after it sold for a greasy price of $155 a kilogram.
Their wether clip of about 70 bales this season ranging from low 13 microns to 14.5 microns will be bound for the suit market in Italy.
The Australian firm may be among bidders, but are expected to be mainly interested in the 18- to 20-micron range and halfbred wool in the low 20s.
Unlike last year when there was more re-offered merino lots when wool values were lower, prices have spiked and this offering is mostly from shorn wool since November.
A year ago average 18-micron merino wool made a clean price of $16.70/kg.
"Now I am expecting prices to be close to $25/kg clean."
Mr Burridge was hesitant to put a price on The Bend lots, other than heated bidding could be expected.
The market was reaching the stage where the best outcome would be for it to hopefully smooth out before growing again to give all sectors in the pipeline greater confidence, he said.
"We would love to see another 10% gain and to get to levels where wool needs to be and closer to contributing to farmers’ incomes.
"But we would suspect that manufacturers would probably start seeing where the ceiling of the price of wool is compared to competing others and that is the challenge to what’s at hand."
Manufacturers have to factor in their margins as some products can take a year to 18 months to sell after the wool is bought.
He said the price hikes were from a global shortage of crossbred, mid-micron and merino wool with Chinese buyers coming back in force and there were no longer wool stocks in warehouses or farmer sheds.
The "regal fibre" was always going to come back as buyers recognise New Zealand’s high farming standards and the shift to environmental sustainability, he said.
Even second shear and oddments was making $5/kg clean with wool going under the hammer as quick as it was coming in the door.
Encouragingly, fresh investment in the wool business is being made with new plants being developed in China.
Wool volumes are unlikely to increase quickly as it takes time for farmers to turn around their stocking types and ratios or reverse the trend of previous years towards wool-shedding sheep bred solely for meat production.
This is even more visible in Australia where there has been a 20% drop in sheep numbers year-on-year which is among reasons for the price spike in merino wool.
Mr Burridge said the quality of crossbred wool was up for length, staple strength and lack of colour, while the increased production per head had helped farmers’ bottom lines.
More meaningful wool prices were encouraging farmers to lift wool preparation in the shearing shed, he said.
Ewes typically producing an average of 5.5 kilograms of crossbred wool are this season growing an extra 300 grams to 400 grams.
