Wool exporters have mixed views

Last updated 10:49 18/02/2014

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Wool exporters, brokers and scourers are wondering where the sheep are as wool auction clips have plunged to be 15 per cent below predictions.

Exporters say the only conclusion is that Beef+Lamb New Zealand's normally reliable estimates of sheep numbers are out by as much as five million this season.

Beef+Lamb economist Rob Davison admits last year's drought "may have messed things up". He thinks the season is running later than usual and is confident the wool will eventually come through the system.

However, wool exporters have mixed views about the chances of a "wool bubble" from unshorn sheep appearing.

The biggest shortages are in the South Island and auction rosters for the second half of the year are nearly 15 per cent below where they are expected to be. Passing rates at auction are a low 5-6 per cent and exporters believe no wool is hidden in the pipeline. Sheep numbers were still falling, Shearing Contractors Association president Barry Pullin said. And because of the drought, sheep were this year growing less wool, a shortage he expected to continue into next year.

The bulk of the South Island clip had still to be shorn in February and March but he said a bubble of wool this year would not suddenly appear.

Wool Exporters Council chief executive Nick Nicholson ruled out more private sales of wool as having an influence and said he trusted the Beef+Lamb figures. "I think their trends are close and hard to fault, but this year we can't see where the sheep are."

Sheep estimates are used to forecast auction bale numbers and so scours can plan throughput.

Cavalier's Canterbury Wool Scour uses Beef+Lamb figures to calculate how many kilograms of wool per head to expect. Chief executive Nigel Hales said this year "there is something so wrong with the numbers. We have to accept that the volume of wool is going to be less, especially in the South Island."

The scour was also being hurt by a change in requirements from New Zealand's No 1 customer, China, for more unscoured greasy wool.

He said he didn't know where the next wool would come from. "We don't run our second plant now and it's all looking grim at the six-month mark."

New Zealand Wool Services, which runs a different scour business model to Cavalier because it owns the wool, said it had increased its scoured wool volume and was still sourcing enough wool.

However, its Purelana brand manager Malcolm Ching said he had concerns for the future.

"We can't reconcile the sheep numbers either. Anecdotally most people are picking a figure of close to 26m rather than Beef+Lamb's 30.9m."

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Exporter Segard Masurel general manager Peter Whiteman said the numbers had been a mystery for a while.

"We accepted big drops prior to Christmas and thought it could have been a late season for winter shearing, but volumes were good. It's looking like the sheep are just not there any more and it's more in the South Island, so we have to start believing the numbers are right back."

Driving the decline were ongoing dairy conversions, particularly in Southland's former sheep country, and better returns through dairy grazing contracts, feed crops and heifer support.

"The drop is nowhere as dramatic in the rest of the world because of dairying and because of its access to water," he said.

- The Southland Times

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