DEMAND FOR WOOL

Hawke's Bay Herald-Tribune, Issue 123, 10 June 1937, Page 6

DEMAND FOR WOOL

(Own Correspondent—

Stock Decline and Prices Harden TRENDS DURING 1936

# -By Air Mail.)

LONDON, May 5. The chief factors contributing to the intensification of tbe demand for wool in 1936 are reviewed by tbe Imperial Economic Committee in a comprehensive work entitled, • "World Consumption of Wool, 1936." "Wool supplies moved steadily from the countries of primary production at hardening prices, and stocks in most consuming centres showed a decline. This achievement was all the more notable in view of the reduced purchases of France, Germany, and Italy, the Japanese-Australian trade dispute, and the various political, labour, and economic disturbances in certain Continental countries," it is noted. "The chief factors contributing to this development may be briefly suinmarised as follows," the review con"tinues : — "A general improvement in purchasing power and industrial conditions in some of the more important consuming countries. • . . "The increased demand for wool in the United Kingdom and the United States (the fwo largest world consumers). . , "The confidence engendered by tho sound statistical position of wool in the chief producing countries at the close of the 1935-36 season. "The improvement — to a limited ex-1 tent only — of international trade in wool products in some countries. "The general psychological effect, as the year went on, of the increasing realisation of the progress of rearmament in some countries, and of its probability in others. "The hope of some relaxation of trado barriers following the . currency adjustment arrangements of the gold bloc countries in September. "During 1936, the United Kingdom, the United States, and Belgium largely increased their purchases of raw wool. The wool textile industry in the United Kingdom maintained high levels of activity throughout the year; stocks of crossbred wools showed an appreciable reduction ; and there was some improvement in exports of wool tissues. A number of smaller consumers also increased their imports of raw wool. Poland and Czechoslavakia being the most important. ' x World Foreign Trade • "It is significant to note, however, that in almost all cases where imports of wool increased, the demand was chiefly on the part of the home consumer, and there was no noticeablo expansion in the aggregate volume of the world' s foreign trade in wool products. The United States, which has £ad only a minor influence on the world market for -wool in recent years, bought largely in botb Australia and South America during the opening months of the 1936-37 season. The maintenance of a high degree of industrial activity since September, 1935, reduced stocks of domestic wo'cls and prices moved into line with the import parity price of foreign wools." In Belgium, activity remained satisfactory throughout the year resulting from iJhe improved economic and financial situation, and there 'was some improvement in export trade. Imports of wool into France during 1936 were much reduced, as. compared with the years before 1934. The industry experienced a difficult year, owing in part to the general industrial depression in the country oonsequent upon the continuance of deflation, and in. part to labour disturbances and increased costs of production. It was nofc until the devaluation of the franc in September that there was any sign of. increased activity. A sharp improvement followed, mainly on home account, but this was not maintained to its full extent. Imports of wool into Germany were also reduced. There was some improvement in exports, but trade reports in general indicate that the industry was severely handicapped by the lack of its normal wool supplies. Supplies of wool in Italy in 1936 were only just more than half those in 1935, and export trade in wool tissues was much reduced. Unusually heavy wool purchases in the first half of 1936 compensated largely for the abstention of Japan from the Australian market after June, so the aggregate imports in 1936 were only 10 per cent,' below the high point reached in 1935. Stocks were much reduced. and there was a further expansion in exports of wool tissues and wool yarn. Demand for Crossbreds. A feature of the year was the improved demand for crossbred wools and the relatively high prices obtaiped for them as compared with merinos. A definitely scarcity developed in the lower qualities. This may be partly attributed to the increased demand for uniform cloths, the general fashion trend towards woollen goods, the utilisation of crossbreds in Coronation decoration' goods in the United Kingdom, Bubstitution for the merinos in fixed price goods as wool values hardened, and the operations of Japan in New Zealand, where supplies of lower grades were already reduced, and South America, and of the United States in South America. Prices of raw wool showed minor fiuctuations until the opening of the 1936-37 setlling season in September. There was then a sligbt upward '.movement, which was changed to a sharply rising trend in November and December. Operations of such countries as Japan, Germany, liussia on individfial markets had an effect from time to time of disturbing -the generally uniform trend of world prices. In particular South African prices were for some months on a higher level than Australian for some qualities of merinos and South American and New Zeaisnd crossbred prices were sometimes pushed to unduly high levels. In general, however, the increased prices were the outcome of the pressure oi demand upon a healthy market, and there was a marked absence of speculative forW'ard buyiDg. The rise was most marked 5m low cro«sbreds4