THE TREND OF PRICES.

Taihape Daily Times, Volume XI, Issue 3497, 27 May 1920, Page 5

THE TREND OF PRICES.

The commercial editor of the New Zealand Herald, writing on the above subject on Wednesday, states: — Business appears to be feeling the effect, of the news regarding lower prices at Home and in America, aud buyers are operating more cautiously than they have done for many years. In America the general fall in prices has been described as rather substantial. It is due to perfectly natural causes. Unlimited orders pouring into America lifted prices all round, and also increased the rate of exchange payable by outside countries. In Auckland the immediate result was the cancellation of orders sent or to be sent to New York, amounting to tens of thousands of pounds, and apparently most countries adopted the same course, for the export returns from America during the last few months show a tremendous falling off. This brought down prices, as it always will, and when once the break in export prices commenced it was not long before domestic prices followed the same track. Commercial houses are well aware of this movement and have been holding off American purchases as much as possible. A truth regarding market fluctuations cannot be too clearly understood—when there are more buyers than sellers prices go up, but when there are more sellers than buyers prices go down. This has been illustrated a thousand times in the Auckland Stock Exchange as in the Westfield fat stock sales, in the Chicago wheat pit as in the London wool sales, and there is no necessity to look for any other cause whatever. English prices appear to have given way under the same temporary cessation of buying. Advices by the lonie mail last week suggest that the era of extravagant buying, that was directly responsible for high prices, had already reached its zenith and would decline, allowing prices to assume a more natural level. What permanent level they will reach it is impossible to know; everything depends on one thing, and one thing only. If there should continue to be more sellers than buyers, as apparently there are at the present moment, then prices will go j down still further. If the world's supplies are not sufficient for the buyers in sight, the condition that prevails in such articles as wheat and butter, then those commodities must go up, even if 50 others go down. So far as New Zelaand products are concerned, therefore, the prices for next season will depend on the relation between the world's supplies and the ; world's buying capacity. Each commodity will rise ana' fall according to its own individual position. THE WOOL MAEKET. .« j

Wool: At the present moment it looks as if nothing can save wool, at anj' rato so far as crossbred is concerned, iio grade in which New Zealand is principally interested. A year ago crossbred and merino had risen just about in the same ratio, each being worth in London about 150 per cent, above pre-war prices, but during the past 12 months crossbred has almost stood still, while merino touched about 500 per cent, above pre-war rates. This Eas been disastrous to the price of clothing, as the fashions have run in the direction of the more expensive description, and it was recently stated by the head of a big firm of Lonon tailors that the best quality cloth would soon be unobtainable at less than £3 a yard. At this figure the material alone" for a suit would cost over £lO. The obvious remedy was to turn the fashion in the direction of the cloth made from crossbred woo], of which a huge accumulation was piled up in London, »t one time estimated at 2*000.000 bales, nearly equal to the combined clip of Australia and New Zealand, whereas merino wool has been in relatively short supply. It has been estimated that the same labour and the same mills would turn out in the same time about twice the number of yards of cloth, if operating on crossbred wool, as they do now with merino wool, so that with a chance of fashion three drastic improvements would follow —the shortage of cloth would soon bo -at an end, the fabulous price of high-class wool would fall, and fho increased consumption would soon use up the immense quantities of New Zealand wool that now appear to be a drug in the market.