Hot Droppings | Website
Velvet A Waiting Game
06-12-2007 | webmaster
Several velvet pools have come and gone since the last issue of Hot Droppings - and very little product has sold so far because buyers have not met operator PGG Wrightson's price expectations.
It is understood that key road buyers were selling until two weeks ago, moving 25 to 30 tonnes of product and had established what many farmers would view as an acceptable price of between $110 and $130 a kilo. However, last week Wednesday, when the pool accepted $10 less than the previous day, buyers began questioning what was happening.
TDF understands that existing stocks both in New Zealand and in Korea are having a major impact, dampening demand for more velvet. It could be mid-January before things really get moving. It's looking like a waiting game.
One experienced observer suggests PGG Wrightson might be better to suspend the pools for now, rather than continue passing in product. There's a need to establish what is acceptable for both sides.
Sales at the South Island pool this week were "a start" and "enough to stimulate further competition and cash flow" according to PGG Wrightson national velvet manager Tony Cochrane. "This season's starting prices are $20 to $30/kg higher than those in last season's opening sales." He says currency is also having an impact.
And while there's a Velconz logo on the top of pool reports, the Velconz people are not yet having any say on what's happening at the pools, one told TDF.
The three directors of Velconz Holdings Limited - which will be a shareholder representative grouping - met in Wellington last week to work on the detail of a legal structure and plan to have a draft constitution ready in the next week.
Meanwhile, the four directors of Velconz have yet to publicly name an independent director to complete that board, and then they can develop a joint venture shareholder agreement.