WOOL PROSPECTS

Hokitika Guardian, 6 January 1931, Page 2

WOOL PROSPECTS

BRUTISH TRADE REVIEW

A LITTLE BRIGHTER ALL ROUND

Reviewing the wool market as it appeared on -November 2.5 th last, the date "'lien the last London series of the year opened, simultaneously with tne tirsi sale ot the New Zealand season Messrs H. Dilution, Sons, and Co., London, Bradford, Boston, and Wellington, observed that the one “satisfactory feature was that the stagnation has been pierced, a,I though there is still much irregularity. Merinos have somewhat improved their position. Report from every centre indicate an increasing consumption. New arrivals are being absorbed with unprecedented rapidity, and stocks generally are low. Tops, even in Bradford, are being used quickly a,s they can he produced; in fact, merinos now seem to have found a safe basis, and a general confidence appears at last to he returning.

CROSSBRED SITUATION

“ On the other hand, the movement in crossbreds lias assumed a strong and sensational development in the opposite direction. .There have 'been large dealings) in South Americans at a serious break in yalues. The low prices have happily brought out many buyers, although for the moment its effect will involve the establishing of a lower level which is startling, and which will entail an entirely new revision of prices for tops and yarns. The collapse has been so far confined to South Americans, hnt everybody Is anxious to see what the effect will he on the New Zealand (season. The New Zealand growers mav not be willing to sell so cheaply, and surprises are possible.

EXCHANGE FAVOURS ARGENTINE

“Unfortunately for New Zealand, as Messrs Dawson point out, the exchange rates “favoured Argentine purchases.” The buyer in South America finds the depreciated currency slightly over 20 per cent in his favour. This constitutes a serious competitive factor against New Zealand, where the exchange is only njbout 3 ner cent ’p favour of the buyer. Although this variation mav be temporary and doubtful in its internal advantage to the selling coutnry. it ir- of real and immediate importance to the British consumer here, and is sufficient to encourage 'speculative operations. These vagaries of exchanges in wool-producn o, countries, especially in South America and Australia, have to he taken into account; and this season thfev mav become as serious a problem .to the importer as the world-wide tariff barriers are to the exporter. Consequently, fluctuations of exchange and changes in freight (as has occurred in South Africa} are greatly disturbing the trade and are producing additional uncertainty in a market already sorely troubled; but despite depreciated currencies, internal prices of each country must, stabilise at equivalent world levels in the couiise of quite ft short period,

COMPETITION IN CLOTHS,

" Those facts, together with the difficulties and variations of costs of proel notion between competitve cloth producing countries, are creating anomalies which at the moment appear nlmost to overwhelm or neutralise the great factors of supply and demand. The latter must, however, soon become operative, and then we shall find that tli© wool position is not so hopelerp ns to justify recent pessimism. The visible stocks of crossbreds are admittedly heavv. 'but the present low values cannot fail to force consumption and to find many new outlets. Already there are signs of speculative operations due to confidence in their cheapness.

CASH FOR GOODS

•* The general position is, therefore, a little brighter all round. The cautious hand-to-mouth trading still persists, and thits must continue until the ‘cash for goods’ terms are relieved bv a gradual enlargement of credit, which has always been the accompaniment of prosperity. Meanwhile there is ginict regaining of confidence, with a, belief that the worst lias been passed, and that those who have survived the hurricane mav hope to enter into better weather.”