WOOL PRICE

Dominion, Volume 14, Issue 17, 15 October 1920, Page 7

WOOL PRICE

A VERY SERIOUS POSITION

SURPLUS STOCKS EXCEED 2,000,000 BALES

. Production exceeding

CONSUMPTION

FARMERS ADVISED TO HOLD

. A very important, statement regarding ■rtvool was placed before tho House of Representatives yesterday by the Prime' It was. announced recently ■that two well-known New Zealanders ■tow ill London, Messrs. W. D. Hunt and ,Wilson, _ had _ ben asked by the High Commissioner to. inquire regarding *he prospeots of tije 'wool market. Mr. Massey informed the House that he had 'Mceived the following cablegram from the_High. Commissioner with reference to the work of this committee:—

Messrs. Hunt and Wilson have met the ! Director of Raw Materials, the Committee of the London Woo] Brokers, JLondon and Colontial wool importers, Australian woolgrowors and others interested in the trade, ana have now reported. The Teport will bo sent by mail. The following are the principal points: : Firstly, stocks of the Imperial Government's Australian wool in the United ■Kingdom and elsewhere afloat, and in (Australia on Juno 30, amounting to 8,019,177 bales. The stocks of New' Zealand wool amounted to 856.377 bales, .roughly, one and a half years production. Allowing for stocks which would be head in a normal year, stocks of Australasian wools on June 30 were approximately 1,650,000 bales in excess. Stocks In South America at tho same time were estimated at 200,000 bales above normal, and South Africa at .100,000 making a total, roughly, of 6,000,000 bales excess. It scorns that the worlds wool production has gained on tne worlds, consumption since the outbreak of war by about five months' growth.

Secondly, sinoa November, 1918, about 17 months' growth of Australasian wool ias been disposed of in 19J months,- and It is evident that the world's consumption has not equalled production ranee the armistice.

Thirdly, war conditions forced prices lo extreme figures and enforced economy in manufactured goods amongst the civil population. Tho 1 purchasing power of .wool of the consuming population of Burope has been enormously reduced, and to supply impoverished ' nations with wool oa extended credit for home conBumption is difficult and risky! The .teturn to normal conditions can only bo gradual. . J

Fourthly, the reduction of the current .Australian clip, estimated at 400,000 ■teles, through the drought will assist m general position, but the most that tan be hoped for in the immediate fu'Suction C ° lMmption 07ertaka

Mily .the surplus 2,000,000 bales must ™lv If a considfil 2 Ws tfme, and can consumption gradually/The problem, therefore, is to ensure its being held in 6uoh a way as to . minimise 'as far as possible its detrimental effect on Mfimitf problem is made more diffiou!t from the New Zealand standpoint by fashion and demand being strongly in favonr of fine wools. Of the cL. stacks 55 per cent, are class now selling badly, as compared with 6 per cent, of the Australian, while Si per cent, of the New Zealand stocks are fair selling lines against 15 per cent. Australian, and l 11 per cent, are best selling lines aa compared with 79 jper cent. / Sixthly, low crossbred wools are comparatively cheaper to-day than the mojority of other raw products, and sooner or later must return, to normal. It should be one of the 6afest things to hold. For all practical purposes wool can be regarded as an imperishable commodity. The Australian Committee are endeavouring to assist the position by spreading wools of the current Australian clip over a period of 12 months, and by limiting the amounts offered at Australian and Ixradon auotions. They anncipate that if the banks, brokers, and growers work together, tho financial part of the holdover can be carried out without Government holp_ provided the Director of 'Row 'Materials co-operates in feeding the market gradually with Imperial Government stocks. ' The New Zealand Committee consider that similar control in case of the Dominion can be carried out only by' the Government, which, course they do not recommend because :

(1) While Australia is the dominant factor, in fine wool production, New Zealand is not in crossbred, and if the Dominion attempted to withhold its clip, the result would be to give the market to ether crossbred-produu-ing countries. (2) Tho crossbred clip is already spread over 12 months, as approximately half the total is produced in each hemisphere. Hence the wmmittea consider that any attempt at interference would result in more harm than good. Seventhly: As the whole of the worWs wool cannot go into consumption in tho Immediate future at any price, somebody must hold a portion. The dominant factor at present is the Imperial Government, as holder of the world's accumulated surplus. The Department has 6hown no desire' to unduly force' its wools on tho market, and the committee suggest that thi Government of New Zealand should request the Imperial Government urgently by telegram to give an undertaking not/to unduly force its wool on the market, but to hold stocks firmly and only place them on thvj market in such quantities as will be' absorbed without seriously depressing prices. This -would steady the position and restore confidenco throughout the wholft industry, and apart from sentimental reasons would benefit the Imperial Government, as a serious decline in crossbred values would hit the British Tijeasury. Kightly: The committee think it is clear from the above that crossbred wool has a future, and that if those growers financially able to do so hold their clips ■until consumption and change in fashion make more impression on stocks, this will assist the whole position. Someono must hold tba wool, and it is better for financially strong growers to do so than for speculators to step in; Tho committeo consider the. New Zealand Government should make the wliolo position known to growers, and tlwy urge those who can do so to hold back their wools as long as possible. Ninthly: New Zealand growers could also assist the markot with profit to themselves by increasing ewe flocks wherev.ur the country is suitable, so providing for an increae of meat, particularly lamb, the outlook for which the committee com sidbr to be very good.

Tenthly: No difficulty ia anticipated in obtaining tonnage bo move tho New Zealand clip, but in addition to cheaper storage there are advantages in holding the •wool in New Zealand, where it is not such a menaca to the immediate future of the market as it would be stored in London. Further, thie capacity of London to receive and 6torfc wool is limited at the present moment, and before sending wool to London for sale, growers should ascertain that it can be accommodated. If desirous of holding, the growers should hold in New Zealand, only sending to London if ttay mfcan to moot the market ana take what .they can get for the wool within reasonable time of its arrival. My of. ficera have, been present at the meetings and generally concur in the recommendations oontained in the report.