Wool prices in New Zealand held firm at auction this week although buyers from China were absent due to the Lunar New Year holidays. China is country's largest export market. 35-micron wool price, a benchmark for crossbred wool used for carpets and accounting for the majority of New Zealand's production, rose to NZ$5.81 a kg at combined North and South Island wool auctions, from NZ$5.74 a kg last week. This also implies a 14% increase over the year. About 83% of the 12,024 bales of wool on offer were sold.

Lamb wool, which touched a record high of NZ$7.50 a kg this season, slipped to NZ$7.03 a kg from NZ$7.14 a kg last week. However, it remained 11% above the same period last year.

The New Zealand wool markets were underpinned by a smaller national clip as sheep numbers declined to their lowest levels in more than 70 years. A 10% drop in the value of the New Zealand dollar against the US$ in the past year made wool exports more affordable. Nevertheless, slump in crude oil price made synthetic fibres cheaper, pushing the textile markets in a competitive environment.

Experts opine that wool exporters globally were facing some headwinds through 2016. With synthetic fibres already at their lows and weak oil prices set to continue, the textile fibre markets are likely to get even more competitive.