13 Sep 2008

Wool prices rise, but international demand subdued

1:57 pm on 13 September 2008

A subdued international demand for wool restricted the positive impact of a weaker dollar at last Thursday's wool sales in Christchurch and Napier.

Almost 20,000 bales of wool were on offer.

In line with the sustained improvement in prices seen in recent months, prices for most types rose by a further 1% to 3%, while mid-micron wools gained up to 4%.

But in its sales report, the country's biggest exporter, New Zealand Wool Services International, says the gains did not reflect the full potential benefit of the exchange rate.

The New Zealand dollar has fallen about 6% against the main wool trading currency, the US dollar, since the last sale a fortnight ago.

John Dawson of New Zealand Wool Services International says the softer demand for wool is linked to the slowing world economy, due to the global credit crisis.

He says consumers are concentrating on paying food and fuel bills, and are buying fewer items such as carpets and rugs.

Dawson says New Zealand wool prices are expected to continue rising despite the muted world demand, helped by a further devaluation of the New Zealand dollar, and restricted wool supplies due to the decline in sheep numbers and climatic factors.