THE PRICE OF WOOL

Dominion, Volume 6, Issue 1698, 14 March 1913, Page 8

THE PRICE OF WOOL

4 — LONDON V. THE COLONIES. WHICH IS THE BEST MARKET? SOME LOCAL OPINIONS. Tim following lot tor to '(lie Editor of Tim Dominion speaks for itself:— Sir, —Apropos of the continued advance in the price of wool at tho London sales, and which is steadily widening the difference between the colonial and London value?, I am reminded of tho very remarkable statement made by Messrs. Jacomb, Sun and Co. (wool brokers), in their annual report on tho wool market. This firm gives the following differences in the value of Australasian wool in the London and colonial markets during itlie last ten years, I'JOS to 1912:—

In every year the difference, as stated, is against the colonics, but if Hie differonce between (he cost of selling locally and the cost in London d am assured that it is iibout from los. to 17s. Gd. per bale, according to circumstances) is .taken into account, it appears that, with the exception of the year 1903, the difference is in favour of the sales in London. Now, if Messrs. Jacomb and Son's figures are accurate—and they ought to bo very nearly so—the loss to Australasia for this 'ten' years' period is enormous. For example, take the year 1912. and deduct 17s. Gd. per bale from tho London values, .and we have:— , 1

Colonial. London. £ s. d. £ s. (1. " 11 15 5 1.1 18 1 t or a difference against tlio colonies of 2s. 8(1- per bale. Now, I have not exact figures before me, but I am Itold that throughout Australasia at least 1,500,000 bales are sold before shipment; 1,500,000 bales at, say, per bale, so 'as not to magnify tho difference, equals Ithe colossal sum of JM,500,000, and.mqre or less this annual loss has been going on for nine years. Can these figures of Messrs. .Tncomb truly state tho position, and if true, am I wrong in drawing the conclusion from ithem that I have? It is difficult to believe that only once in ten years have our wool-growers been right in selling locally, and for the year. 1913, although tho freight charged is higher, it looks as if 'the loss would be even heavier than in 1912. The question is too vital to our farmer. l ) to let there be any possibility of doubt. .Will those with knowledge take this matter up and ventilate it?—l am, etc.; INQUIRER. A BROKER'S VIEW. One leading wool-broker consulted with regard to the above was inclined, in the first instance, to doubt the accuracy of Messrs. Jacorab, Son, and Company's figures. It was an extremely involved question to begin to dip into, and even with his experience—one of considerable length —he was not able to say outright at any time whether it was precisely advantageous to sell here or ship. He made a point of advising his clients to do exactly what he thought was in. their interests. If his advices from London were --f such a character as to indicate a strong market, he would certainly advise shipping in preference ' to selling locally. Whether Messrs, Jacomb, Hon, ami Comuany'? figures were correct was a very different matter, and, one which would take a good deal of trouble to analj'se carefully. Whilst talking over tho matter our informant quoted from letters which he had received from London yesterday. One correspondent stated that "the growers who had sold locally would be whipping the cat." Another, written on January 30, said: "Sales closed yesterday with very firm tone and keen demand." {J'hes'e were quoted by way of illustrating that advice ho had given to certain growers was pretty sound, and that whether to sell here or ship depended entirely on conditions and events. " SOME INSTANCES. Mr. M. J. Bourke, wool buyer and broker, said that anyone in the business realised that it was diplomatic on the part of Jaocmb, Son, and Co. to publish such a statement,' for the plain and simple reason that the more wool thlit was sent to London, the better for them, but in hard business it did not at all follow that London prices w*:ro always the best. If that were so, how. was it that three-quarters of the total clip of Australia was sold in the country, and that to avoid tho excessive London charges foreign countries like Germany, France, and Japan were sending their . ageuts to New Zealand and Australia to buy here? It was not done because they prices here were lower, but because they 'would have to face tho heavy London charges and wait for the sales, whereas they can ship direct from hero to their own ports, ind have the wool there before it would otherwise havo reached London. Mr. Bourko maintained that the tendency on tho part of growers was not in favour of London sales, and supported it by saying that London brokers wero coming to the colonies to uphold their reputations. Firms like Hirst and Co., and Francis, Willey and Co., who used to be represented bv brokers, now sent their own men to i\ T ew Zealand, and holders of wool were finding it best in some coses to ship direct to ports other than London —Hull, for instance. "I could instance clips that havo been divided this last season. Take,. Mr. Lowry's (of Hawke's Bay), of last season. He fared much better on. the local market than he did in London;"'- Two brothers, runholders, in the Wairarapa, held opposite views regarding the sale of their last year's clips, but the one who sold in "Wellington did better thnn his brother, who shipped .to London, though their places are, only divided by a wire fence. There may be reverse instances, but I am only setting out that Jacomb's claim that London prices are belter is not a substantial one. "I know that this last season a London firm had sent cable messages to big growers hero stating that they ought to get this or that for their wool. Oiie Wellington, grower got a cabla stating that his wool .should bring 13d. in London, but lie elected to sell locally, and got 12 5-8 d„ which was better. But a point is that foreign buyers can get quick delivery and direct shipment of the wool bought hero, as against tho delay and heavy oosts of London sales. PRICES BETTER ONLY ON PAPER. .Another wool man said that oven admitting the Jacomb's figures to be correct they proved nothing. The average London price must always be higher than the average New Zealand price for tho reason .that no low-priced wool was ever sent Home—it was all sold here. Slipes and scoured wool, on tho other hand, was seldom sold here, but invariably was •sent to London, and, of course, realised a good price, as .it has been partially treated. For example, 100 bales of lock's might realise J.'Boo here, but GO bales of the same wool scoured would bring, perhaps, .fcIOOO in London. This was a verv important point in assessing the avorag'o value of wool in the bale. All our slipes went Home, 100, and they would help materially to swell tho average price per 1.-alc. Our informant said that !)2 per cent, of the New South Wales clip of this season was sold in Sydney, which was surelv proof that iViere was nothing'convincing in the Jacomb's figures. Furthermore, he stated that in Sydney France was the largest buyer, Germany second, and the United Kiingdoin third. ' ANOTHER VIEW. The Sydney "Wool and Slock Journal" of February 7 replied to. the Jacomb's statement as follows:— "Once more the attempt is being made to hoodwink prominent wool-growers into a belief I hat they are losing money by selling wool at the seat of production. Messrs. Jacomb, Son, and Co., of London, issun their annual comparison of values hero and in London, ntuf persist in giving Usuies which havo bcuii already exposed.

in these columns ns being absolutely .misleading and unfaii. The persistency with which this comparison is issued may lead to its acceptance if it be allowed to pass unchallenged, but no doubt the bulk of growers aro well awaro by this time that the policy of local realisation is not only the most convenient, but most remunerative.

"Messrs. Jacomb, Son, and Co. give .£ls His. 7d. as the value ol' Australian wool in London and ,tll 10s. M. as the value per bala ill Australia, and leave growers who sold at the seat uf production to lament a loss of J!4 Bs. 2d. per bale, which is, on the fate of it, most ridiculous. For instance, there were 1,910,213 bales of wool sold in Australasia during 1912, which at a loss of JM Bs. 2d. per bale would mean that no less than J;S, 121,009 was thrown away. Why Messrs. .lacomb. Son, and Co., if they believe their own figures, do not come out here and buy a big slice of our clip and pocket some of those eight millions is hard to understand. Strange, too, that no one else has scented out this wonderful investment, which would make them millionaires in a aingle season. "Growers are advised to pay no hoed to comparisons between.London and Australia, as they are altogether misleading, and those who persist in making them do not pay any compliment to the intelligence of the wool-grower. A fair comparison is impossible for very many reasons, In the iirst place, the periods covered by the London and Australian figures are different, and, of course, include .many fluctuations. London only gets the big straight lines of well-classed and prepared wools, of which, in many instances, the skirtings and faulty sorts aro sold locally. It is thus hardly fair to compare the price of the lower qualities here with top lines in London. . One has only to think, of the big volume of crutchings, of store sweepings, and of dead wool sold locally to recognise how unfair any comparison is. Small unskirted clips aro always sold in Australia, and the local figures include -greasy locks, crutchings, sweepings, stained pieces, bellies, dead wool,.etc,, and all these go to reduce tho 'average.

"The London brokers neglect to deduct the cost of freight and extra handling in the case of shipment to Ljiulon. Tliis can be put down at fully 255. per tale. Deducting this amount from the London figures leaves itH Is. 7d., and the total London sales were 823,000 during 1912. Will anyone say that the same number of bales could bo picked out of the Australian sales to average more than th? Lt ndnr. average? Yi'hy, many clips sold ill Sydney have averaged oyer .€2O a Me this season, and the official Sydney estimate at Christinas was JIM lis. 2d. per bale, equal to quite .£ls 16s. 2d. in London, which is actually 2s. 7d. l>etter than Messrs. Jacomb's figures.

."There is only one possible way to compare London and Sydney figures and that is to take similar wools sold on the same day in both centres. There is absolutely no disputing the fact that Sydney values are not only the full parity of London rates, but. very often considerably above. It is well known to. all sections of the trade that Sydney rates have been ahead of London throughout the season now closing, and the same thing was noted during the 1911-12 season. The prices paid in the Sydney market during the past season, including numerous sales at 15d. toilSkl., would never have been obtained for owners had' the wool been shipped to London; and when everyone knows that values have been on such a satisfactory level the attempt to point out a loss of £i odd per bale is supremely ridiculous. Grliwers should pay no heed to such palpably misleading statistics. Whether values rise or fall in the next half-year, they have the consolation of knowing that they have received excellent prices for their wool, and prompt- returns."

Colonial. London. , Y«tr. £ s. (I. .E s. (1. 190,1 11 18 i 15 9 0 1901 '12 7 3 15 li li 1005 12 13 1 JG 2 fi 1006 13 10 3 17 13 l 1907 11 3 11 17 S 2 1908 : 13 0 2 13 12 6 1909 11 (i 10 15 10 0 1910 13 12 2 1G 18 0 1911 12 10 4 15 \ 0 1912 ; 11 15 5 15 13 7