WELLINGTON NEWS
TRADE AND PRICES,
(Special Correspondent.t
WELLINGTON, May 19
Rutter prices are again on -the clown trend although at 128 s per cwt prices are not as low as they have been, but with European supplies coming on the market in volume, which is only to be expected at this time of the year, a further recession in. values seems inevitable. The consolation' We have is that there has Ibeen a substantial increase in production. ( The total exports of butter from the Dominion tor the nine months of the season to the end ol April at 74,136 tons constitutes a record. While this is very pleasing as a performance the effect is the reverse of satisfactory.
Tho drop in prices is largely due to the excessive supplies reaching the London market. The imports of butter into Britain from till sources amounted to ’115,888. tons against 114.814 ’ the corresponding period of last- year, and 109,836 tons in 1928. It is '-a singular phenomenon that all raw materials and foods stuffs are in excess of supply - at the present time. But this is not so strange as it appears for it is the effect of the post-war. high , prices. Every producing country naturally departicipate in the high prices now ruling and increased production. It is"a' well known fact in economics that high prices stimulate production while low prices impose a check on same. The fall in P riccs we are deal " ing with refers to wholesale .prices; ret-dl prices are quite a different matter.
An interesting article in the “Review,” issued by the Westminster Bank for March deals with the reactions on trade of the recent violent fall in the wholesale price level. Conti - sling the curve of the wholesale price index compiles by an influential financial paper with that of the Ministry of Labour index of the cost of living, it is said that there is “strong presumptive evidence that the fall in commodity prices is. being held, up so newhere between primary producer and ultimate consumer.’-’
The consumers are not' getting- the full benefit of the fall in values, for that seems to be retained by distributors and this . hold-up is having a prejudicial effect on the rate .of; re-; covery of equilibrium • between supply and demand. The supply is in ex* cess of the-present relatively high world retail prices, and if these were lowered to correspond with the drop in wholesale prices consumption would broaden and there would bp greater equilibrium between' supply and demand and more stability in the price level. The next necessary economic", move.-rests with rptailers the world .over and it js within the func-, tion of primary producers to urge re : duction in retail prices. While butter .is nioyiug .back, wool appears to bg moving forward^
At, the March-' pril London sales the prrices declined all lby.|ffihohit Id per lb. ' On. . the January sales, while; at |ihose now current . -prices have advanced Id- all round bringing valy.es back to the January level. This is |he first time for many months there has been an all round , advance at the London wool sqles Aand that makes the movement all-the .more interesting and seenls to indicate that there is a strong .probability that wool values if they do. not advance, ' will at least hold their present''position. , Wool is different from butter. -It is a long range raw material, for many months must elapse before wool is submitted to the customer as a finished product. Butter on the: other hand is a short term product 'and more liable to violent fluctuations. The rise in’wool •at the, Lohjjo.n ' sales >hows. that,, manufacturers ’ after a long range survey of thew ; position feel justified in paying a little more for wool 'being in a measure satisfied that they will be ableHß sell the finished-'article at a reasonable .profit,.
The -tvcoL textile trade must take a long i%n§e view' of .the outlook and Bradford has"'been doing that " for more than a century. In < recent years France, Gcrmaby and Belgium have embarked in .the wool industry and more recently, yLitjjan and Italy have eliteredtvthe:.. field. ToV rilftke a rising market* 1 IjtHereh. -must be keen competition pfiCiha kjiart-; of 'all those users of the' r(tw "fhat&nal. There cannot be that keeu'cpmpetiti on unless users regard the..,,prospects as reasonably good. •
Thus the advance at the current London sales indicate that it, is believed that within six or eight months from now the purchasing power of ultimate consumers will be equal to taking the fabrics that will be produced from the wool now being bought in London. And there is some satisfaction for this for the export trade of loading European countries shows expansion since 1923, that is tfipv haw, been able to sell more goods to people outside the borders of their respective •countries, and while they are able to sell more they are in a position to buy*more.
European trade gives signs of improving- and with that improvement wool is certain to bo in steady demand. , i
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Hokitika Guardian, 22 May 1930, Page 2
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835WELLINGTON NEWS Hokitika Guardian, 22 May 1930, Page 2
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