Wool price collapses
A “collapse” in wool prices, prompted PGG Wrightson to warn that its 2017 financial year will see a “tougher trading environment than 2016”
The New Zealand based farm supplies-to-auctions group forecast that its operating profits for the year to the end of June next year would come in at NZD 62 million to 68 million.
That would be down from the NZD 70.2 million reported for the group’s latest year, and would represent the first decline in four years.
The outlook reflects an observation that “the trading environment for agricultural inputs and services has become marginally tougher in New Zealand.”
“We believe that 2017 will be a tougher trading environment than 2016,” the group’s chief executive, Mark Dewdney, said.
Wool price collapse
He also cautioned over a setback in the wool market, saying that “significantly lower volumes of wool are being traded due to the collapse in international wool prices, and a large reduction in Chinese demand”.
In fact, while wool prices, as measured by Australia’s much-watched eastern market indicator, recovered from a September stumble to stand at 1316 Australian dollar cents per kilogramme last week, volumes have remained low.
Elders, the Australian wool trader-to-feedlots agribusiness said that “less than 32000 bales were offered” last week – “the smallest national total for an October selling week” since at least 1995.
However, PGG Wrightson was upbeat on some other agriculture sectors, saying that “while some sectors are facing lower commodity pricing and a more challenging environment other sectors such as horticulture and the beef market continue to be optimistic about their prospects”.