By Tina Morrison
(Australian Associated Press)
New Zealand wool exports have jumped to their highest level in more than a decade, aided by a lower currency and strong demand from China, the nation’s largest market.
Wool exports rose 19 per cent to $NZ75 million ($A67.70 million) in June compared to the same month the previous year, and reaching the highest level for a June month since 1994, according to Statistics New Zealand data.
Exports to China, which account for two thirds of the total, jumped 34 per cent to $NZ50m.
“The main driver of the increase in value is the weakened New Zealand dollar,” said Georgia Twomey, a commodity analyst at Rabobank.
The New Zealand dollar averaged 71 US cents through May and June, down from about 86 cents in the same period last year, she said. It recently traded at 65.60 US cents.
“That depreciation really improved the value of exports in local currency terms,” she said.
“One of wool’s major challenges is that it is a lot more expensive than synthetic or cotton alternatives, so the weaker dollar helps to maintain US dollar-term prices and improves returns for growers.”
The decline in the value of the currency helped make the nation’s wool more attractive for Chinese buyers, who tend to trade in US dollars, she said.
“Local producers are getting a better return and the prices in US dollar terms for the Chinese mills are looking fairly healthy as well,” she said.
China had also been importing more wool as it seeks to bolster supplies of the fibre into its processing and manufacturing facilities, which had become depleted, Ms Twomey said.
In the second quarter, there was strong demand from Chinese buyers for 24 to 32 micron wool, to meet manufacturing deadlines for knits and overcoats for the upcoming northern hemisphere winter.