WOOL PROSPECTS.

Press, Volume LXVI, Issue 20097, 28 November 1930, Page 18

WOOL PROSPECTS.

!iO TiiS EDITOS or TUB PHESS. Sir,— The author of your article in ' I Thursday's issue suggests with a picas-j iitg and breezy optimism that New laud is on the eve ol a return to materially higuer and prolitaoie levels ot wi price*. ne may w» lift" 1 - f"t lit uianw assertions omy auu pioducts no pruois. more ib another side u> I,lll v\ £>iouj£r-; have lost fortunes in tho uusiueis dux .Jig tlio paat nve or joars. ue Ku.w this to be true. Xiow, therefore, can these same peop e, our old customers on wtiuiii wo must depend again to nit iUs -now z,ealanu clii> be expected to tinance a return to higuer vaiues m tue near tuture out ol their ioriously uepluteU and in some tases almost non-eiistent capital? It is all a mutter of orcuuary business. If a tirin of wool merchants or manufacturers loses, say, £5U,000 on Us purchases in how possibly can this same firm go auead in tydoiv/Jl and tniv ireely aJid without restraint to dj its part, to send wool pi ictss up again? iet this is not an exaggeration, and is a picture o. staie of atfairs m many wool-purchas-iiitr Urms to-ciay. It is a safe assertion 1 that whereas a few years ago there were thirty to forty firms in JUradrord alone who could buy wool almost without limitation, and with ampis backing from the banks, there are not mora than perhaps half a dozen to-day. And yet as "Six Per Cent," your contributor, rightly saya, it is on Bradford that Aew Zealand woolgrowers must chiefly depend for a return to higher values. , A spectacular boom in world tr.iae would bo necessary to bring about the high prices to which sheepmen have become accustomed during the past five or six years. In view of the world-wide financial depression and unemployment, and tho consequent decreased purchasing power of the masses almost everywhere, is such a boom likely? There is no need for us to enter the depths of pessimism. Wool as such is still a highly-desired commodity, and that prices will slowly improve from somewhere about present levels there ia no doubt whatever. Decreased production, which will surely follow the present unprofitable values, will alone do a lot to bring this improvement al>out. But we cannot stop growing wool overnight, and it is on a curtailment of production and the remedying of the internal sicknesses of the wool trade that the return to better prices chiefly depends. It is*a slow process, but already it has begun, and in this much there is hope. The English wool firms have begun to put their houses in order. The weaker of them have been driven out of business during the past few years. The cost of combing wool has been substantially reduced, and that must assist business. Moreover the present low prices obviate very largely th» risks of further heavy losses, and that fact is even more important than lowcombing costs. Bnt most important of all, and before there is any "pep" in the wool trade, and buyers gain that confidence which is so important to ensure healthy and profitable busine&s, there have to be profits made out of wool purchases. This takes time. Wool sold in New Zealand to-day will not be in the hands of consumers until, say, March to May at the earliest of next year, and by that time the clip of 1980-31 will be afmofrt or entirely sold. Six months or thereabouts must elapso before any profits can be realised, and until they are realised to a decently apprcc- [ 'able extent, the trade cannot finance any sort of a return to a materially higher level of values. The best that can be hoped for from the wool-grower's point of view during the selling season which has just Commenced is that the wool-buying and manufacturing firms will experience a moderatelv-profitable year aided by low prices ana lower manufacturing costs, and a gradual return to better business oonditions in general trade.— Yours, etc., LINCOLN. November 27th, IS9O.