THE DANGERS OF HIGH WOOL PRICES

Shannon News, 20 January 1925, Page 1

THE DANGERS OF HIGH WOOL PRICES

In many quarters, the most optimistic opinions are expressed regard, ing the future of the textile industry, and anxiety is felt owing to lack of stocks of raw material. The new clip of the United States, for instance, will not be shorn for six months, and for this reason American establishments must largely depend on New Zealand and Argentina for their crossbred wool.

If it comes to a question as to whether present values can be maintained, for any length of time, however, statistics of the past as to demand and supply must not be regarded as infallible indications. The demand for wool, both raw and manufactured, for the last year or two has cerstainly been above normal, and was greatly stimulated by the exceptionally low values ,of the raw material. The low values held out exceptional inducement not only for the consumer to purchase, but also for the manufacturer to manufacture. With the supervening of the present high values, these inducements to both manufacturer and consumer are no longer existing, the whole situation will evolve itself into a question as to how much the present supply of raw. material is short of a normal world’s demand. if one factor holds risks in the pastoral industry, it is the danger that high prices will encourage the investment of money in land and stocWat excessive figures. It is quite possible, that for a considerable time to • come, snort supplies are likely to be the dominating influence in the wool market with prices for wool and stock showing a corresponding hign level. But that position will, sooner or later be challenged. The use of wool may, of course, be extended further, but what is much more likely, the extreme values of the present may restrict it s range of usefulness considrably.

On the other hand it looks as though the downward' curve in the world’s annual wool clip has reached its limit. In Australia, South America United States, Canada and »South Africa, strong efforts are being made to increase the number of sheep. Stimulated by present prices for wool and lamb, and the downward tendency of dairy produce values, will no doubt have the same effect on New Zealand. Writing on South Australia, an authority shows how the improved standard of the sheep pastured increases the clip. He mentioned that in 1922, with 500.000 less sheep than in 1921, nearly 1,300,000 pounds more wool was grown.

If investments in stock and land are made on a conservative basis, the present range of prices will be a great boon to the New Zealand sheep farmers. But if properties and sheep are brought at extreme figures, investors run the risk of the wool market receding sooner or later with its eventual disastrous effects on the pastoral industry.