COMMODITY MARKETS AND TRADE.

Manawatu Standard, Volume LVII, Issue 182, 3 July 1937, Page 4

COMMODITY MARKETS AND TRADE.

THE WOOL MARKET. (By “Pcnloo.”) The fourth of the series of Loudon wool sales will begin on Tuesday evening, and advance reports Iroin Bondon indicate that values will ease by about Id to ljd all round. The wool shortage experienced earlier in tile year no longer exists. According to Bradford reports, during the whoie of April and practically all through May tliei'e has been very little business done. Users were sufficiently well covered to enable them to hold aloof until they see whether there will bo any appreciable ease in values. So far—the report was written in the middle of May—the easier tendency has been confined to Merino. New wool has come to hand in sufficient volume to relieve the immediate shortage and most firms had accumulated a certain amount of stock. There are topmakers who still accept a penny less than the highest prices quoted, but only for moderate weights for prompt delivery. Although there has been an ease in Merinos it is significant tliat there has not been a corresponding movement in crossbreds. All grades have remained firm at the highest point of the year at a time when Merinos have weakened a little. But the decline must be accepted as one of the inevitable fluctuations of the wool market, which is one of the most difficult of markets to forecast. It is not possible that the demand has fizzled out; it looks more like users requiring a breathing spell after the great rush of wool buying, and with visible stocks large, and assuring that there will be no immediate shortage. New wool will not be available until September from Australia, and about the end of the year from New Zealand, and it is a question whether users have sufficient supplies in hand to carry them over the interval. Although lower values may rule at the opening of the London sales it would not cause surprise if an upward trend shows itself before the sales close. It must not he overlooked that there is political tension in Europe ; France is suffering from severe currency troubles, and the money markets show a decided upward trend. WORLD TRADE RECOVERY. We are apt to fancy that the economic improvement is general or international, while as a matter of fact it is mainly domestic or local. The Bank lor International Settlements in its latest annual report devotes attention to the future of world economic recovery, and reaches the general conclusion that the most legitimate form of further expansion will be found in the recovery of international trade. This opinion has been voiced by many other close observers, but the question is how to bring about international recovery. The domestic boom, it litis been pointed out, itself is largely the result of the artificial fostering of industries which could not bo profitable under a freer trade regime, and to bring national and world price levels more closely into equilibrium might, unless very gradually achieved, precipitate the very depression it is designed to prevent. The removal of uneconomic industries and an all-round lowering of trade barriers might be ultimately salutary, and a prelude to a period of prosperity less precarious than the present, hut its immediate effect would probably be very far from pleasant, And rearmament is considered an obstacle because the uncertainty of the demand prejudices the chances of that very extension of industrial equipment in the domestic sphere which could absorb much of the present accumulation of liquid capital. THE GOLD SITUATION. The run on gold in France has brought that country face to face with serious economic trouble, and all have now to witness the effects. It is not to be supposed that the French crisis will not have its repercussions throughout the world, for the French crisis creates an unbalanced position. France withdraws from the tripartite monetary agreement, with the consent of tiie other tw'o partners, and the franc is to be allowed to find its own level in the exchange market. How this will affect the situation is beyond prediction because no one has any conception of the human equation in relation to such affairs. Adjustments must be made and they may adversely affect the international trade structure. THE BUTTER MARKET.

The price of New Zealand butter in London has remained at 109 s, which is about 3s above the guaranteed price, but reports indicate that the_ market has a weakening tendency. When the retail price of butter in England goes beyond one shilling a pound the demand eases, for the masses then turn to margarine. This merely goes to prove that a wide consumption cannot be expected when prices advance. The consumption of ' butter has expanded greatly in the United Kingdom, and compared with the average consumption in the period 1909-13 there was Inst year an increase of 50 per cent. This was due to butter being cheap, the averago wholesale price of best New Zealand butter being 90s to 100 s. It was because of the low price and the consequent increased consumption that our expanding supplies were absorbed. The imports of butter into the United Kingdom last year exceeded 9,000,000 cwt. as compared with about 4,500,000 cwt. in tho 1909-13 period. Supplies to Britain continue to expand, and last year the records show that South-West Africa sent about W.OOOcwt, the tropical colony of Nigeria about 6000 cwt., and Kenya 21,000 cwt. These are, of course, small figures, but their growth cannot be stopped.