The Daily Telegraph TUESDAY, MAY 31, 1881.

Daily Telegraph (Napier), Issue 3096, 31 May 1881, Page 2

The Daily Telegraph TUESDAY, MAY 31, 1881.

An interesting article reviewing the state of the London wool market appeared in a recent number of the Melbourne Age. The second series of Colonial wool sales opened in London on May 10, under conditions almost the reverse of those which marked the commencement of the corresponding series in 1880. Last year, during the first week of April, prices touched their highest point, tbe advance of 1879 values being equal to no less than 20 per cent. During the subsequent month of May this advance was partially lost, and prices showed a downward tendency, with the exception of a few spirts in the market at the close of the year. The first sales of 1881 were opened on the 15th of February, and closed on the 25th of March, prices showing a further decline on the closing rates of 1880 of from 7£ to 10 per cent. This sharp reaction in value may be traced to a combination of circumstances rather than to any special cause. The two most important elements are to be found in the increase of production and the decrease in the manufacturing demand of the United Kingdom. To illustrate the decline on ; the one hand and the advance on the other, taking the year 1877 we find that out of a total importation of 994,000 bales, no less than 465,000 bales were taken for home consumption, whilst in 1880, with an importation ot 1,057,000 bales, the English market only absorbed 436,000 bales. This decline in the manufacturing demand

of Great Britain becomes more ui_ik_2 when the local wool clip of the two years quoted is carried to account ; thus, in 1877, when the consumption of colonial wool by English manufacturers was 20,000 bales larger than in 1880, we find the estimate of domestic production set down at 152,000,000 lb. weight, whilst in 1880 the return was only 149,000.000 lb. To this falling off the consumption of our principal customer may be attributed the unsatisfactory state of the wool market. The progress of production, on the other hand, has not remained stationary. From 1865 to 1870 the annual increase in the supply of the ra<v staple amounted to nearly 50 per cent.* consumption was overtake-, and prices receded from an average of £23 15s per bale to £16 153., a drop of no less than £7 per bale. The low rates ruling at the latter date gave an immense impetus o consumption, and the consequence f i that prices in 1871 advanced to £20 10s., touched £26 10s in 1872, ranged from £23 10s to £24 10s in 1673 and 1874, dropping to £22 5s in 1875. The decline then became more pronounced, the average price during the next three years being only £18 15s per bale. During the midsummer series of 1879 the lowest point was touched, the average being then only £16 10s per bale, or 5s below the price at which the decade opened. The recovery which set in towards the close of that year, and the causes which led up to it, were dealt with at the opening of the first series of sales this year; it need, therefore, only be stated to complete our range of prices that the average price for 1880 was £20 5s per bale. The money difference in the selliog price obtained in London for colonial wools in 1880 was, in round numbers, £5,000,000 sterling in excess of the sura realised during 1879. Up to this point the financial results of shipments were highly satisfactory, but with the increase of production on the one hand, and the decrease in the English demand on the other, unless consumption is stimulated by the opehing of fresh markets we must not look for a similar rise for 1881. According to the best English authorities, taking the Australasian colonieß as a whole, it is anticipated that something like an additional 80,000 bales will have to be dealt with this year over the quantity handled in 1880. Again, it is doubtful whether the United States will afford the same opening as last year> and if not this would mean additional supplies to find a market for. So far then as the London market is concerned, unless it is eased prices must decline under the pressure of over-supply.