THE BUTTER MARKET.

Hauraki Plains Gazette, Volume XXXIV, Issue 4557, 30 April 1923, Page 1

THE BUTTER MARKET.

EXPERT’S VIEW OF THE SLUMP. A very interesting review of the ent slump in London prices was given to a representative by Mr W. butter market in relation to the presGoodfellow, managing director of the NZ. Co-operative Dairy Co., Ltd., in an interview. According to advices received from the company’s London manager, Mr J. B. Wright,, the slump was primarily ,due to the fact that portion of a large parcel of “Anchor” brand butter which had been sold to New York had been placed on the London market, thus overburdening it and leading to the present collapse. Mr Goodfellow went into full detail to show how New York buyers, by an attempted smart move on their part, were suffering a very severe loss, approximating on parcels already sold as much as 3d a lb. The primary object of the directors of the Dairy Company in selling 120,000 boxes of N.z. butter to New York buyers at Is 5d per lb f.o.b. was to relieve the London market of supplies whic.i might overweight it, and so maintain a steady price. That their calculations had been correct were shown by the fact that on news of this sale reaching the London market it reacted to the extent of 2d per lb, and had maintained a high level till comparatively recently. It was this high level, apparently, that hau attracted the American buyers, who, apparently without looking very closely into the position from a statistical point of view, had diverted portion of their purchases back to the London market, which was already easing, as was expected, from the increased supply coming forward from the Danes’ spring make. Instead, therefore, of meeting that high market which had been maintained by New Zealand’s action in making the American sale, the Americans were actually facing a loss which was contributed to by their own action. The price at which the butter had been sold to them was Is 5d f.0.b., Auckland, and information from Mr Wright indicated that several thousand boxes of this butter had been recently bought in London by English firms at a price equivalent to Is 2d f.o.b.

Very little sympathy, said Mr Goodfellow, would be felt for the Americans in this instance, as their action in sending the butter forward to the English market was a distinct breach of faith, because a stipulation of the sale was that the butter should be consumed in America. Because .of this action on their part in breaking the letter of the contract, the directors of the N.Z .Co-operative Dairy Company Ltd. had taken the prompt action of asking one of their London agents, Messrs Lovell and Christmas, Limited, to open a New York office for handing the company’s produce upon the American and Eastern Canadian markets on a consignment basis. Mr J. B: Wright, and Mr Wm. Lovell (of the firm named), were at, present in New York, and a cable just received stated that satisfactory arrangements had been made by them for the opening of a New York office th deal with the marketing of the company’s produce in future. This would obviate any further risk from American speculative dealers.

On? point in connection with the transaction might well be emphasised, said Mr Goodfellow. This was that if the sale had never been made and the produce sent forward in the ordinary course, the slump would still have taken place, with the additional disaavant,age that instead- of receiving Is 5d per lb. for the bulk of December and January’s manufacture, the company would have had to face a market in the region of Is 2d for that quantity. As it was, the company had in London at the. present time only 25,000' boxes —equivalent to one week’s make in the flush of the season—and this was being put i i store till the market revived. The directors regarded the future with every confidence, because the statistical position was absolutely sound, and after the-butter which wasi at present flooding the market had gone into cold storage there was every expectation that the market would react quickly. In order to obtain good prices, it. was -quite probable that the company and other large holders of blitter would find it advisable to store the present stocks in London and due to arrive, and feed the market during the months of June, July, August, and September, when the new season’s bu't.tei would begin to be available. The exact position to-day was that New Zealand butter had sold as low as 148 s, but had already recovere.l slightly to 1545. At the moment “ Anchor ” butter was not being offered, but was being held firm awaiting the recovery of the market at 172 s salted, and 174 s unsalted. Danish butter was quoted at 1725. The cheese market was likewise reported to be in a weak position, with white selling at from 10.0 s to 102 s and coloured 102 s. Referring to the local market, Mr Goodfellow said that questions were being asked why the price of butter in New Zealand did not immediately fall ir sympathy with prices in London. This idea was no doubt due to the suggestion that the price on the local market, should be governed by the ruling parity in London. This, however, was quite an incorrect basis to work on, because the real value of dairy produce in New Zealand was its f.p.b. price, whether it was bound for London or any other market. Within the last week Australia had been buying—admittedly in comparatively small lots—but nevertheless she had been purchasing New Zea-

land butter at Is 6%d f.o.b. Auckland. The Australian wholesale price a few ; days since was reported to be 2s, with ; every probability of the market re- j mainiag firm for some time. On the j basis of Is 6%d f.o.b. the selling price j of butter in New Zealand would be ; Is 10d. To-day’s actual price was Is ; lOd for first grade and Is lid for i ' superfine. It was probable if the | London market did not recover rapid- | ly that the local price would be re- i duced It should be remembered, I I however, said Mr Goodfellow, that . during the past season the local con- > sumers had on the average purchased ' his butter at less than f.o.b. value. Earlier, in the season butter was actually sold on the local market. at I i 2d and 3d per lb less than the prices I • realised by butter manufactured at I the same date and exported to ihe United Kingdoi There was not the , slightest doubt but that the market would recover before long, and butter shipped to-day to the United Kingdom | ■ would realise comparatively high | prices. So far this season, concluded Mr Goodfellow, the local consumer has done exceedingly well in comparison with London prices, and he should not complain if the local price during a temporary slump period of a few weeks, is held at a higher figure than the immediate export value.