9 Dec 2011

Eurozone crisis hits wool sales

1:41 pm on 9 December 2011

The impact of the European debt crisis has hit the wool trade earlier than expected.

Wool prices have been generally holding up after their rapid rise in the past year.

However, prices fell by 4% overall at Thursday's auction of North Island wool and fewer than 70% of the 12,500 bales were sold.

The exporter, Wool Services International, says the fall in price and demand reflects the turmoil in the European Union where some countries are on the brink of financial collapse.

It says the uncertainty about the future of the euro currency is keeping many buyers out of the market.

A Wool Services marketing executive, Malcolm Ching, says exporters were expecting the impact to show up after Christmas as wool supplies built up, but it is happening now and is hurting the whole supply chain.

Mr Ching says the fact more than 30% of the offering was passed in at Thursday's sale without reaching farmers' reserve prices also reflects many wool growers' resistance to accepting lower prices.