WELLINGTON NEWS

Hokitika Guardian, 28 March 1930, Page 2

WELLINGTON NEWS

THE WOOL MARKET. (Special Correspondent.) WELLINGTON, March 26. The wool season 1929-30 will g° down to history as one of the most disappointing. Ever since the sales began in November prices have 'been descending and users who bought in the earlier sale 'shave now to write off 2d per lb and more, and in view of this one canned; wonder that buying is from hand-to-mouth. Ihe position 'is a difficult one to .explain, but a statistical economist of the "United States in an address delivered •before wool . growers gave the most comprehensive reason for the (iodine in values.

Using London auction prices as a basis and the levels prevailing in 1914 as 109, the price index in September, 1929, was only 3 per cent above that of July 1914. Since then as we all know wool is lower than in 1914. There was a steady upward ticmd in prices from 1922 to the end cf 1924 followed by a downward movement from tip© end of 1924 to the end of 1926. The next two years witnessed a slight recovery but towards the middle of 1928 the trend turned downward again and has been descending ever since. According to the ••conomist the first basic reason for the movement of prices can be found i» i l sur “ vey of world production trend of raw material. World production m 1900 amounted to 2,687,000,0001 b and remained at approximately that figure ■for the next 7 years. In 1809-10 the production trend moved irregularly with no definite movement either upward or downward. The maximum of 2,971,180, 0001 b reached in 1912 ws. not equalled again throughout the entire uecade. In the last decade with only tvo exceptions, 1922-23, the trend of production has moved readily upward, leaching a peak in 1928 with an estimated record total of • about. 3,461,-000,0001b. This represents an increase roughly of 28 per .cent in the'period from. 1900 to 1928. 'The first- explanation, 'for the ■ declining price- trend therefore lias • been • the steady gain in. supply. In order for prices to advance or even remain stable in 1 the face' of a persistent increase in supply therefore, consumption must have equalled or outrun the gain in supply, and this has not been the case■ with raw wool.

Regarding consumption it is known that iio consuming industry competes vigorously in the open market to purchase raw material of which the supply is excessive. In the second place the population of the world has increased steadily / and wool apparel is still being worn by a good portion of the population despite the perfection of artificial fabrics, the increased competition which is being felt from the other textile fabrics and the fewer number of garments being worn by the feminine half of the population. Japan has been steadily increasing its imports of raw wool with the almost universal adoption of A\ astern dress and the consumption has held up at fairly high levels on the Continent. A notable exception has been the United States. In 1923 the estimated domestic wool consumption in the l nned States was 812,442,0005 b. By 1928 it. had fallen to 672,942,0001 b and the per capita consumption lias fallen far behind the growth of -population. Then there is the effect of competition of on the price structure of raw wool. The supply and demand for other fibres has (increased considerably. Total world production of rayon for instance was only 109,090,0001 b a few years ago while the estimate for 1929 is about 475,009,0001 b. World production of cotton in 1920-21 was 21,880,000 bales whereas m 1829-80 it is estimated at 29,200,000 bales.

Likewise world production ot silk was only 67,162,0001 b in 1909 while in 1928-29 it is estimated at 1.01,832,000 Jb. With tho advance of 28 per cent' in the world output of raw wool since 1900 it is obvious that world pioduction of all fibres has been steadily upward which has had the ,effect of intensifying the competition between them, arising from the possibility of substituting one for the other. And the influence of extreme importance affecting the world price of wool lias been ered : < conditions in world financial mark' i ’. There; !.m , Ibcen extreme strinsroncy and tightness of credit affec‘ >ng inevitably the commodity markets of all kinds. These facts constitute the background, and basing opinions or these facts this American authority considers that the outlook for the next decade favours a level somewhat lower than that of the decade just passed, although the prospects for the immediate future favour a measure of recovery from the low levels recently established, hut it does not seem probable that prices will approach those ruling in 1925-26 and 1927. There is much that wool growers and manufacturers can do to improve the situation, such as stimulating consumption by educational efforts and fostering the use of woollen fabrics by the women’s apparel industry.