WOOL PROSPECTS

Nelson Evening Mail, Volume LXIV, 10 January 1931, Page 10

WOOL PROSPECTS

BRITISH TRADE VIEW A LITTLE BRIGHTER ALL ROUND Reviewing the wool market as it appeared on 25th November last, the date when the last London series of the year opened, simultaneously with the first sale of the New Zealand season, Messrs H. Dawson, Sons, and Co., London, Bradford, Boston, and Wellington, observed that the one “satisfactory feature that had emerged from the wool market was that the stagnation has been pierced, although there is still much irregularity. Merinos have somewhat improved their position. Reports from every centre indicate an increasing consumption. New arrivals are being absorbed with unprecedented, rapidity, and stocks generally are low. Tops, 1 even in Bradford, are being used as quickly as they can be produced; in fact, merinos now seem to have found a safe basis, and a general confidence appears at last to be returning.... CROSSBRED. SITUATION “On the other hand, tjie movement in crossbreds has assumed a, strong and sensational development in the opposite direction. There , have been large dealings, in South Americans at a serious break in values. The low prices have happily brought out many buyers, although for the moment its effect will involve the establishing of a Tower, 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, hut everybody is anxious .to see., what the effect wiil be on the New Zealand season. The New Zealand growers may 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 about 3 per cent, in favour of the buyer. Although this variation may be temporary and' doubtful in its internal advantage to the_ selling country, it is of real and immediate importance to the British consumer here, and is sufficient to encourage speculative operations. These vagaries of. exchanges in wool-producing countries, especially in South America and ; )a Ap a s- : traiia, have to he taken into account ; and this season they may. _ become ' as serious a problem to the importer as the world-wide tariff barriers are to the exporter. Consequently, fluctuations- pf exchange and changes in freight (as has occurred in South Africa)' are greatly disturbing the trade an cl are producing additional uncertainty in a market already sorely troubled; but despite depreciated currencies, internal prices of each country must i stabilise at equivalent world levels in course of quite a short period. COMPETITION IX CLOTHS

“These facts, together with the 'difficulties and variations df costs of production between competitive .cloth-pro-r ducing countries, are, creating anomalies which at the moment: appear almost to overwhelm or neutralise the great factors of supply and denjand. The latter must, however,-.soonkhecome opera,-, tive, and then : we shall;’ find, that the’ wool position is not, so ? hopeless as to justify recent pessimism; ' The visible stocks of crossbreds are 1 ’ admittedly heavy t 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 this must continue until the ‘cash for goods’ terms are relieved, by. a gradual enlargement. of credit, which lias always been the accompaniment of .prosperity. Meanwhile there is a quiet regaining of confidence, with a belief that the worst has been passed, .and that those’who. have survived the" hurricarife niay' ljppo to enter into better".weather.,” ff : '