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Do objective measurements or subjective assessments explain more of the variation in strong wool auction prices?

Do objective measurements or subjective assessments explain more of the variation in strong wool auction prices?
Peer reviewed
Sumner RMW
Proceedings of the New Zealand Society of Animal Production, Volume 69, pp 80-84, Jun 2009

Article class: Conference Presentation

Subject Terms: Animal production/wastage, Finance/economics, Integument/skin/wool/hair/fur/feather

Animal Type: Sheep

Publisher: New Zealand Society of Animal Production

Abstract

Auction prices of a total of 74,134 lots of wool in the strong wool segment of the New Zealand wool clip sold between 1 July 2005 and 30 June 2007, were analysed by multiple regression analysis to estimate the proportion of variation in wool price explained by four objectively measured characteristics and by subjective assessments of length and colour with up to five additional codes. The objective characteristics were vegetable matter content, mean fibre diameter CIE Y (brightness), and CIE Y-Z (yellowness). Changes in the New Zealand dollar exchange rate were adjusted for by covariance against the exchange rate of the US dollar on the day of the auction. The residual standard deviation for the objectively measured characteristics was 22.2 c/kg clean, explaining 80.2% of the variation in price. In contrast, the residual standard deviation for the subjectively assessed codes identifying "outlier" lots in terms of characteristics deemed to be important by scourers and processors was 21.4 c/kg clean, explaining 81.6% of the variation in the auction price. It will thus benefit wool growers to prepare their wool such that lots conform to the recommended best practice guidelines rather than for them to conform solely to objective specifications.

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