Wool export company highlights volatility of halfbred wool market
Demand for halfbred wool can change on a dime because of its dependency on Chinese fashion and farmers are being told to expect more volatility.
Bloch & Behrens Wool (NZ) Limited general manager Palle Petersen warned a group of corriedale enthusiasts gathered in the Marble Point woolshed near Culverden that farmers should be prepared for the volatility of the halfbred wool market.
"A couple of years ago halfbred wool was selling at almost record prices," Petersen said.
"This was very much driven by a Chinese trend for heavy felted coats. This also drove the price of crossbred lambs' wool up.
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"What happened in China, as it always does, was a lot of traders and middlemen jumped on the band-wagon and flooded the market with this type of wool. This has had a severe impact on crossbred lambs wool this year and also the coarser end of the halfbred has slipped back since the highs we saw the last couple of years.
"Combined with this trend, Chinese consumers are becoming wealthier and looking less at price and more at the quality. They are moving towards finer wools and lighter fabrics. This is one of the risks in the halfbred arena, but it is helping the merino side which in the last six months has really taken off.
"We are looking at the best merino season in a long time for anything finer than 19 [microns] due to this demand for finer, lighter, better quality cloth.
Bloch & Behrens Wool (NZ) Limited is the wool export arm of PGG Wrightson.
The company was different to some stand alone exporters because its mission to find the best possible contracts in the marketplace to the benefit of its growers, Petersen said.
Historically the client base had been in the crossbred sector, he said.
The company has developed new products that can help farmers manage risk. It has more fixed price contracts than any other company in New Zealand.
"We have introduced three-year contracts with some flexible price movement," Petersen said.
"We are constantly looking for opportunities to bring different ways to help farmers manage their risk and lock in some certainty."
The team was small with no offices overseas and few overheads, he said. It is not driven by having to sell big volumes.
"As a part of being 100 per cent owned by PGG Wrightson, we try to promote the fact that we can tell our customers where we source the wool from. The wool is traceable back to the farm."
Two years ago Bloch and Behrens launched its Integrity brand to highlight this traceability and give consumers more confidence.
Bloch and Behrens has become more involved in the merino sector.
"The merino side has opened some new doors and new contacts for us around the world. Some of these will use the mid-micron types. The missing link [for corriedale breeders] is that bit in the middle," Petersen said.
"We can start applying some of the skills we have learned in the past couple of years in processing [like combing] to try and target people who are looking for the halfbred side of the clip."
The opportunities and sticking points for the half-bred sector were varied, he said.
As well Chinese fashion, a lot of half-bred wool was used in the upholstery market. Bloch and Behrens sold cross-bred lambs wool to Scandinavia and the United Kingdom upholstery markets which used woollen spun yarns. The same sector also used worsted yarns.
"There is also the hand-knitting yarn sector which is not to be underestimated. These are generally small companies but we are trying to promote our Integrity brand here and the traceability aspect.
"We also send good volumes of cross-bred lambs wool to a blanket maker in Sweden. They are making noises about wanting to go finer. We have done trials in the past with half-bred fleece. This has to be very clean because they only do woollen spinning [as opposed to worsted] and this doesn't remove the VM [vegetable matter]. We have to be very selective in what we send there.
"One of our success stories is a German company specialising in carpets for the airline industry. We've developed a half-bred cross-bred blend for this company- quite an expensive wool type but they demand a softer feel and are committed to this for now."
Bloch and Behrens is resigned to the fact wool is a volatile commodity, Petersen said. Political and social instability around the world affects the capacity of people to make long-term decisions.
"Unfortunately when you are relying on China taking half the clip and then if all of a sudden they reduce their consumption by 25 per cent, it's a big gap to fill. The best we can do is come up with something that can help manage this."