Competition for cross-bred wool gets stiffer

09 Jul '08

2 min read

Sheep farmers in New Zealand may have a stronger market demand and a relatively handsome remuneration for wool this season as exporters and processors vie over the scanty supply of cross-bred wool.

Since the number of sheep has fallen drastically due to drought and dairy conversions, wool reared this time is much less compared to the previous season. Demand on the other hand is firming up and it believed that leading players of PGG Wrightson and farmer cooperative will usher an entirely new level of competition in the market.

In fact, Wool Services International has actually offered to give growers a guaranteed premium for a 12 month contract. A similar proposal of forward contract was introduced to a few selected growers last year in order to cater wool supplies to its Purelana brand.

Purelana will pay a base premium of 5 percent above the market price and a $2.50 per bale rebate for every bale delivered to the company. As such, growers who sign-up the contract would derive $15-30 a bale more than through the auction system.

As of now, Wool Services International, which exports about 40 percent of the country's cross bred wool clip, has plans to sell all its quality wool under the Purelana brand.