The end of June heralds the last wool sale of the season and is an opportunity to review the year.
This last sale resulted in dismal indicator prices that were lows for the season and crossbred wools at prices not seen since September 2010.
The market tells us of lack of demand due to the Euopean recession and buyers nervous to purchase with falling prices.
They report that a period of stability is needed before any market lift will be seen and that could take a while.
China has been the dominant purchaser of our wools in both the crossbred and fine wool market, with the UK and Italy a distant second.
Wool Industry initiatives are few and far between to revitalise this product and the fact that the Wool Unity Group has not met for a year reflects pessimism for future price prospects.
Budgeted wool prices for crossbred wool for the coming season looks likely to be in the region of 320-330c/kg greasy and at a rate unlikely to inspire 
farmer investment.
Redundances at Sumitt Wools in Oamaru and at Norman Ellison Carpets in Onehunga, shows the recession is hitting demand for carpets as low new home building and synthetic fibre competition has taken its toll.
The low wool prices are a double blow to sheep farmers with the fall in meat prices once again putting profits and land use options under pressure.
For the record crossbred wool prices started the year in the 650-690c/clean range and sadly finished 30-40% below that around 390-480c/kg clean.
Better branded fine and mid micron wools seemed to have faired better with smaller drops of about 13% over the season.
Proponents of crossbred brands will advocate that this is the secret to crossbred wools future although promtion and publicity around such brands has been as quiet as price rises during this difficult time.
If you can brighten up this pessimistic report with more optimistic wool news it would be a pleasure to read.
Wool indicator prices
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4 Comments
Wool has been in the doldrums for so many decades now that it is surprising to remember that once upon a time it was the dominant commodity in New Zealand.
To give a modern comparison, it was as if Fonterra had overnight downgraded its 2011 forecast of $8.00 per kilo of milk solid payout to $6.40 and then $5.12 next season. Such a scenario would, as it did in 1967, cripple the country. Today it would also, given present high levels of rural debt, imperil the banking sector.
https://www.iod.org.nz/News/Articles/Article/tabid/308/itemId/76/Wool-f…
The good news,
1.wool is heading back to to its long term trend......
2. not many dairy supply farms will be redeeming fonterra shares to run sheep.
The price comparison regarding Fonterra is close to the bone...
Her milk processor had just announced that the price paid for her fresh farm milk would fall nearly 10 per cent to 33c a litre from Monday, 4c less than it costs Macdonald to produce it.
http://www.theaustralian.com.au/national-affairs/deep-pain-down-on-the-…
Old friends - Oz Ice cream coy goes for 7x's earnings.....
Swiss food giant Nestle yesterday announced it had sold Peters to Australian firm Pacific Equity Partners.
The price was not disclosed, but sources said Peters had earnings of about $35 million last year and PEP had paid at least $250m using a mix of debt and equity after a competitive sales process.
http://www.theaustralian.com.au/business/aussie-equity-firm-licks-rival…
history:
Peters and Browne's bought Tip Top in April 1997 and created the largest independent ice cream business in the Southern Hemisphere with combined sales of $550 million.
And in June 2001 Fonterra bought the Peter and Browne's Foods Business off Heinz Watties, acquiring the Tip Top brand as well.
But outside Western Australia, the Peters brand is owned by Societe de Produits Nestle SA, and Mr Doumani said today the sale of the West Australian business made good business sense.
http://news.smh.com.au/breaking-news-business/fonterra-sells-aussie-ice…
and:
Up to 140 jobs face the axe at the Peters and Brownes plant in Balcatta after New Zealand dairy giant Fonterra sells its WA ice cream businesses to confectionery giants Nestle and Bulla Dairy Foods.
Nestle will acquire the Peters brand in Western Australia and the Connoisseur ice cream brand, while Bulla will acquire the license to manufacture and market the Cadbury ice cream range in Australia.
Read more: http://www.watoday.com.au/wa-news/dairy-giant-axes-140-wa-jobs-20090429-an92.html#ixzz1zUsYMFXn
Suppliers can be comfortable in the knowledge that:
The Canterbury-based company made a net loss of $3.1 million in the 12 months ended July 31 last year, smaller than the loss of $11.7 million a year earlier, according to financial statements lodged with the Companies Office.
http://www.scoop.co.nz/stories/BU1206/S00749/synlait-milk-narrows-loss-…
"While New Zealand's competitive milk pricing environment means the company is yet to achieve a profit, we remain committed to our strategy of quickly moving into specialty and nutritional powders," chief executive John Penno said in his report
Penno said the company's growth aspirations will need "substantial ongoing investment
The milk processor was granted a waiver to a breach of its banking covenants by ANZ National Bank and Bank of New Zealand in June last year. As at July 31, its bank debt was $85.1 million. Interest and facility fees fell to $5.1 million from $9.1 million in 2010.
priceless:
"The company recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position," the company said.
no news re the farm side?
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