THE WOOL TRADE.

Otago Witness, Issue 4028, 26 May 1931, Page 14

THE WOOL TRADE.

IMPORTANCE OF LONDON SALES. A writer in the Yorkshire Post makes some enlightening comments on the Bradford wool trade and the importance of London series of wool sales, which he contends are an invaluable factor in maintaining the stability and buoyancy of the wool markets. Some interesting points are raised which merit pondering. The article is as follows:— There is a marked contrast between the position of merino wool to-day, on the eve of the opening of the second series of London sales, and that it occupied on January 19, prior to the commencement of the first series of this year. What has occurred should cause /Yustrahan woolgrowers to appreciate more accurately the value and importance of the London woo] sales. Those who are interested solely in the sale of wool in the Commonwealth, not content with having greatly developed the sale of raw material at the source of production, have for some time past urged that arrangements for the sale of wool in London should be subordinated to those made in Australia, particularly in Sydney. It has been claimed that the clashing of dates, or the holding of sales in London immediately before a series in the Commonwealth, almost invariably result in a depression of prices due to a weak market in London. It has been

suggested even that the London sales should not commence until the bulk of the wool has been offered at the Australian sales by auction, and the people who make this suggestion urge also that no wool should be exported'from Australia without having first passed through the auction sales in the Commonwealth.

Despite the important growth of wool sales in the Commonwealth, the London wool sales still serve a very useful purpose for those who do not care to carry the long risk attached to the direct importation of raw material. They give also an alternative market to woolgrowers, which is very necessary, having regard to the manner in which the value of wool fluctuates, for it gives them a freedom of action in selecting the time of selling their raw material which they would not possess if direct shipments to London were not permissible. During this last slump of wool values, which has extended over a period of nearly three years, it has been easy for those who desire to see the whole of the Australian clip brought under the hammer in the Commonwealth, to make out a plausible case in favour of selling either in Sydney, Melbourne, or at one or other of tlie colonial sales. The circumstances which have caused the wool trade and the ■wool textile industry generally to have the unfortunate experience of the last two years and 10 months, have, however, been entirely apart from the sale of wool in either Australia or London. If the wool had been held in the Commonwealth it would have depreciated just the same, until the time came for a turn in the tide.

UNWARRANTED APPREHENSIONS Australian woolgrowers should not fail to note that the check to the downward movement of wool values was given at the London sales and not in Australia—even, indeed, at the very series of London sales which some of those who have persistently depreciated their value predicted was likely to see the bottom almost drop cut of the market, and selling brokers in this country permitting raw material to flow into the hands of ultimate consumers, or speculators, at ruinous prices for the growers. The inference was that London selling brokers were not likely to be much concerned about the interests of woolgrowers. What actually happened at the last London wool sales should discount future criticism of this character in the minds of woolgrowers in Australia. It was obvious that conditions at the wool textile centres the world over at the close of last year and the commencement cf this, were deplorable, and the outlook not at all rosy. Both buyers and sellers, therefore, anticipated a very trying period during the January-February London woo] sales, which commenced on the 20th of the first month of the year. Wool of all qualities was, admittedly, cheap. Many consumers were, however, content, still to carry orders uncovered, and in a general sense there was an abstention of buying which drove prices down to a point which was well below what was justified even by the then limited consumptive demand. The result was that during the first week of last London sales, wool was sold at prices which actually, not relatively, were the lowest within the recollection of the oldest of those engaged in the wool trade or the wool textile industry. LONDON ARRESTS THE SLUMP.

But so far from London selling brokers being indifferent to the interests of their clients, and allowing either consumers or speculators to get possession of the wool at slaughter prices, they withdrew a considerable proportion of the wool originally included in the selling programme, and curtailed the duration of the sales. That action by the London brokers to safeguard the interests of their clients, was quickly justified. Those who had failed to cover in a favourable market, and one which was known to be bare of stock, fearing that they would be caught short by this action on the part of the brokers, made haste to buy against their immediate requirements. These in the aggregate proved far greater than estimated, and forced a rapid upward movement of wool prices for the balance of the offerings at the first series of London sales. It was feared that the advance before the close of the sales had been too great, and that there would be some degree of reaction before the opening of the March sales. The opposite has, however been the case. Foreign bidding at the sales in Australia, led by the Japanese has lifted the prices of merino wools to a still higher level, so that warp 64’s tops are now quoted on the Bradford market at from 4d to 5d per lb more than what they were sold for during the first week of the opening of the first series of Lon don sales this year. Cape wools have shared in the improvement, and to a lesser degree so have crossbreds. The important point to note is that the check to one of the most serious slumps ever experienced in the world’s wool trade was given at the London wool sales, and not in Australia. Moreover, it was brought about largely by the sagacity of London wool brokers who sensed that the downward movement was being pressed uu duly, and who declined to throw the property of their clients to the “ bears.” Their action has been amply justified, and it is to London wool brokers that woolgrowers are indebted for the substantially higher prices they. are to-day receiving for their raw material and those who have wool still to sell in London will get far better prices than those who sold earlier in the season at the wool sales in Australia. London wool sales and London wool brokers have given a most effective reply to their critics in Sydney.