THE WOOL MARKET

Dominion, Volume 14, Issue 47, 19 November 1920, Page 8

THE WOOL MARKET

WELLINGTON SALES POSTPONED DIFFICULTIES CONFRONTING THE BUYERS MORE INFORMATION WANTED iowo, flrSt Welli , n ft°n wool sale of the 920-21 season winch wastHo have been held on Monday next, has been abandone'i-- A*"!' ,1 5 - 00 ha } M ,VCTe to have been offered at thus sale. The brokers were desirous that the sale should be held in order that tho market might be tested with some representative North Island wools, but the buyers took another view. I hoy considered that in the present stato of the market it would be better not to attempt any sales in the North Island. The New Zealand Woolbuyers' Association suggested that tho first North Island sales should be cancelled, and the woolbrokers agreed to this course. Tho Wellington Woolbrokers' Association announced Mia abandonment of the local 6alo yesterday.. Tho next sale, under tho revised arrangement, will take place at Christelinrch on December 7. A Timaru sale will follow on December 10, and a Dunedin sale on December 11. The first Welington sale will tako place on December 20. Tnr. first Auckland sale will be held on February 3, the dato fixed originally for the second sale. The value of wool m tho meantime remains very uncertain. The brokers realise that any attempt to force sales would bring prices down to an even lower level than was recorded in Christchurch at the bcinning of tho week. The buyers do not wish to operate at all. until the situation has developed to some extent, and any bids that they might make would be highly conservative in their estimate of wool values. Tho London prices cannot be regarded yet as established on any firm basis, and it is to London that the buyers must look for guidance. _ The feeling among buyers and brokers is that the situation will remain highly unsatisfactory until some definite information regarding the policy of the British Government "becomes available. The Director-General of liaw Materials is holding some 2,000,000 bales of Australian and New Zealand wool, and nobody knows l:K>w he pro Wises to handle this great accumulation?" If he announced that he proposed to put this wool into the market quickly, then the brokers hero undoubtedly would advise their clients to withhold their wool from sale and take advantage of the provision that tho Government is ready to make for the guaranteeing of bank advances on wool. The market would 1» crushed under the weight of the accumulated wool, and it would be hbpcless to look for offers for the new clip nt anything liko reasonable prices. Any revival of the market is considered to lie improbable while the accumulated wool hnngs over it. If ,on the other hand, the Director-General (if Raw Materials declared himself definitely to be a firm holder for a specified period, say eighteen months, the market would have, a chance to recover its tone and on outlet could be found for a portion of the new clip. The general opinion in the trade is that much of this year's clip will have to be held in the Dominion in any ease. This being so, the companies and tho banks will have to reach some sort of agreement as to the basis of value upon whicli advances are to be made. The .values 'necessarily will be set low for this purpose, since the banks will require to assure themsrjves that when tlw wool is ■sold it will at the very least bring more than the amount of the advance. The opinion has been repressed in "Wellington that the tentative valuation will not exceed Sd, or fid. per pound for coarse wool. It is hoped that the sales next month will go some way towards indicating market values for this country. THE LONDOJTWOOL MARKET

PROSPECTS REVIEWED. (From Our Special Correspondent.) Palmerston North, November 10. Tho following letucr on the prospects of the wool markets has been received by a ■Palmerston North firm from a wellknown English firm. The letter is dated September 30, and the following ore excerpts:— .. As regards crossbrods (50 s and below), the outlook is anything but promising. During tlie past six .months -prices have been declining rapidly, which has been partly brought about by the absence of any demand for this class of wool, and 1 partly by the fact of large Btocks being piled* up. For a long time past users have been looking forward to the time when more interest! would be taken in coarse wools by a change an the fashions, but up to the" present time there are no signs of that long-wished for event taking place. Unfortunately, at iiho present time, fino wool is out of demand except for specialities required by manufacturers to complete existing contracts. Owing to t'ihc great uncertainty in regard to the future, the wholesale houses have for some time past censed to place large orders for cloth in the hands of manufacturers, and have acted purely on a hand-to-mouth policy. What tjie trade is principally "suffering from is that, owing to so much of the world's machinery being out of commission/ con. sumption'falls very far short of what is required to provent stocks accuinulatiing, and until that position is relieved, it is difficult to see where the rise dn prices is to mine from. Germany is very hungry for wool, but owing to her fma.ncinl position, no arrangements appear possible to overcome the difficulty unless soino 'international agreement is come Ob in regard to finance. 'The risk-of granting credit to Germany ■at tho present time is considered too grea'', and, as far bo seen, no assistance is likely to be given in that direction. We understand ■ that large stocks of crossbred wool are being held in South America, and the owners are making every possible effort they can to dispone of the wool, bust up to the present without success. The latest proposal is that their own Government should come to the rescue by arranging to ship the wool to otlhor countries against long credits. If something of the same kind could be'arranged by our own Government in regard to the heavy stocks of crossbred* held by them it would be n great relief to illio trade, but we have every reason to beliovo that our Government is dead against any transactions of that kind.

You will therefore see from what we have slid that from our pom:! of view Hie outlook is fur from promising, nnd we think that for the next two or three years trading in wool will be carried on under very; great difficulties, tlio lnos-t! important of which will ho finaiveWhat we fear is that shipments niny have to bo held in store for long periods without any certainty lliat the wool can be sold when offered. Warehouse accommodation will be taxed to the utmost to accommodate stocks, and there is every likelihood thaii a .considerable quantity of privately-owned wools which mav be shipped to London will bo diverted to other ports to be stored. If this were to take 'place at would naturally result in tho lock-up of a large amount of capital, which, under present conditions might lead to unpleasant re-

sults. ' At one iiinie there wore prospects of the Government stocks being liquidated l>y about the middle of the year 1921, hut. after what lias taken place during tho Inst six months ill is pretty evident that the process of liquidating stock will ho extended over a much longer period l . "Up to the present tho Government have imposed reserves on all lo'.ta catalogued', and are likely to continue that policy ns long as possible, but when free wool begins to come on to tho market in fairly large quantities, wo cannot see how they can impose limits if ilhcy are above market values, as in many cases they are.