Drought likely to clip wool haul
The drought will probably drive national wool production down about 5 per cent next year and possibly even further should parched conditions persist, an expert says.
But the jury is still out on how much that will hurt farmers' pockets.
Drought-affected animals grow less wool, which could also be more prone to fibre breakage.
Beef + Lamb New Zealand economic service executive director Rob Davison said at this stage wool production next year was likely to be down about 5 per cent or 9000 tonnes on this year to about 159,000 to 160,000 tonnes, based on clip per head.
But that drop could deepen should the drought persist and force farmers to cull their breeding and replacement stock which would have provided next year's wool, he said.
This year's wool production had been boosted by excellent grass growing conditions last year, he said.
A 5 per cent drop in production did not necessarily mean less cash in hand for farmers, as it depended on what happened to wool prices.
"We do see fluctuations in price of more than five per cent between years. This year the wool price has come back by about 25 per cent on last year."
Wool Services International marketing executive Malcolm Ching said the earlier-than-normal cull of livestock forced by the drought would create an immediate bubble in wool supply and a corresponding fall-off in a few months. But it was a good time of year for that to happen, he said.
Shearing was slowing as the colder months approached, and supply and demand at the moment would be roughly balanced.
However, in a few months the shortfall in wool would underpin prices - which could benefit farmers.
He expected farmers would continue to divest themselves of stock.
"The weather has to change very quickly so we get the benefit of the warmth with the rain creating fast growth of grass . . . but it's probably too late."
Sheep stopped growing wool in times of drought and food shortage in order to concentrate on survival, he said.
"A drought creates a stress on the animal and the first thing it does is closes off the wool follicle, that creates a weak point in the wool.
"When the wool is combed you get a lot more breakage and that does affect the wool processing quality . . . so you can get a higher degree of pilling . . . and a lot of shedding of fibres in the finished product."
But degraded wool quality alone was probably not going to significantly impact farmers' incomes.
Fibre breakage in wool could have the effect of making it finer, and - if the breakage was not too substantial - increase its value, while wool scourers could minimise the impact by mixing drought-affected wool with other wool.
But as a general rule, droughts cost farmers, he said. Even though wool prices could rise or wool could be upgraded to a higher price bracket, that was generally not enough to offset the impact of lower volumes and extra costs - such as buying replacement stock.