Limitoo News

NZ woolgrowers among sectors hit by China's Covid-19 restrictions

A resurgence of Covid-19 within China is causing headaches for some primary sector exporters, with lockdown measures disrupting economic activity and slowing down distribution networks.

No caption
Wool Photo: RNZ/Carol Stiles

China's ongoing "zero-Covid" strategy uses swift lockdowns and aggressive restrictions to contain any outbreak. As part of this, late last month Shanghai was placed into the biggest city-wide lockdown since the Covid outbreak began more than two years ago.

PGG Wrightson's South Island wool manager Dave Burridge said demand for wool had dropped off because China's manufacturing regions had been affected by the Covid-19 restrictions.

"It's having a direct impact on bottom-line returns to woolgrowers, certainly there is quite a dramatic effect on [prices for] the types [of wool] the Chinese normally buy."

With banks in China closed some exporters were also unable to open their letters of credit, which was impacting cashflow, he said.

Burridge said the softer demand had been exacerbated by a lower quality wool clip this season, a result of wet weather and high humidity.

"It's been a difficult and challenging season for growers to produce the quality of wool that we normally would see this time of year," he said.

AgriHQ senior analyst Mel Croad said the lockdowns in China were a major concern for supply chains.

Ports continue to operate, but logistics were expected to be disrupted due to transport restrictions slowing down trucking to and from the port, she said.

"The Shanghai port is one of New Zealand's key ports for beef exports and exporters are keeping a close eye on the situation there."