Merino sheep farmers are heading for one of their best years, despite fine wool prices retreating a bit from their peak.
Wool prices in Australia took a dive earlier this month and that affects the merino industry in New Zealand because most of its fine wool clip that goes to auction is sold in Australia.
However, the New Zealand Merino Company says prices are still 50% - 70% ahead of where they sat a year ago.
Commercial manager Keith Ovens says some correction to the market has been expected and that's probably been accelerated because of the unrest around the world and the financial situation, although prices are still significantly above last year.
Mr Ovens says at current prices, 19 micron wool is fetching $13.50 - $14 per kilo greasy.
But New Zealand Merino buys 40% - 50% of the wool on contract and Mr Ovens says growers who signed two or three year supply contracts before prices slid from their peak, are going to be doing a whole lot better than that.
He says for example, in the 15 - 15.5 micron range some of the prices that growers are locked into are $10 higher than what the market is today.
Mr Ovens says on top of the strong prices, merino wool production is up as well this year.