WELLINGTON NEWS

Hokitika Guardian, 16 November 1928, Page 3

WELLINGTON NEWS

Wool and the sales

[Special To The Guardian.]

WELLINGTON, November 14

Owing to the adverse weather conditions experienced during tin; Inst few weeks, shearing has hoen retarded, consequentlv the offering at the first sale in Wellington on Friday will not consist of more than about 7000 hales at the corresponding sale last year. The general belief is that the values will recede, but that factor has already been dealt with somewhat exhaustively Interesting comment is made by AAT’nchombe Carson, Ltd., the well known woolbrokers, of Sydney, with regard to the experience of the wool trade during September. What is shown is the important part confidence plays in the sale of wool. From July to August trade on the Continent and Yorkshire was quiet. No wool sales had been held and all those concerned were uncertain with regard to the price the new season’s wool would command. Not only was the manufacturing side of the industry convinced that it could not operate profitably on the basis of the prices ruling towards the latter half of the season, hut it was also nervous as to what might happen should there he a readjustment df prices. The mill owners desired cheaper wool, but the trouble was that no one could tell him how far any receding movement would go. If no one had the courage to step in.' a relapse might have occurred, such as has been experienced on previous occasions. With the world possessing j-o surplus stocks of raw material, the risk of a slump was minimised. Japanese and German consumers appeared and became factors in re-establishing confidence. What followed was that within a few weeks those requiring wool again operated freely in the market. Winchcombe, Carson, Ltd., write that there was no great revival in trade to account for the restored position. W hat happened was that nervousness disappeared and a more buoyant market resulted.

Attention is directed to the fact that on three occasions only in tin* last eight years has wool realised bettcprices than those available this season, and on each of these occasions a setback had subsequently occurred. The deduction was that excessive prices for the staple created false ideas as to the wool earning capacity of flocks and placed prices of sheep at a point from which they had eventually to recede. The firm states that it feels cheerful as to the probability of wool selling on about the current level of prices, but it does not expect to see a. definitely rising market for the staple. This is somewhat cheering.

Messrs Dawson and Co., the London wool brokers, writing immediately after the close of the last series of che London wool sales, which ended on October 4th, accounting for the weak and erratic state of the market and the drop in nrieos. pointed out that the difficulty of obtaining any new business fo* yarns, except on last season s cheap opening rates, began to cause anxiety. This was intensified prior to the opening of the London sales, when holders of raw wool (who could not get adequate values if the wool were combed or sputd deemed it advisable to send their raw material to the London sales. Consequently, although only 57.000 hales of now arrivals were available, tho quantities amounted to 140,000 bales, including 35,000 bales from consuming centres. This unexpected development did much to shake confidence for it indicated that a considerable body of the trade intended to become sellers rather than buyers at the auctions. The feeling prevailed that wool values had struck a slippery slope and that the only policy was to wait until they had reached the bottom.

Moreover, if collapse was inevitable consumers were naturally anxious that it should come before heavy purchases were made of tbe new season s clip. It is necessary to take a broad rather than a sectional view of the principal factors governing tbe present serious position if confidence is to be restored; for this is tbe primary need at tbe moment before any revival of demand can be expected. The whole industry, from tho grower to the distributor t i doth, has received a great shock by the sudden change in the market.

.Reports from all centres indicate that, with the exception of a somewhat larger quantity of tops in Continental centres, the stocks of raw material aie not excessive. Tbe chief trouble has not been entirely a price difficulty, although it must bo realised that the raw material has been too high lor producers to make profits. Wool is not the only commodity that is suffering ; cotton, artificial silk and jute have all shown some decline. Many basic industries are finding similar strain and depression. The heavy trades, coal, and the railways are all seeking some economic relief and the woollen industry is suffering severely from the lack of buying power in the Home trade because of these general depressions.