WOOL SURPLUS.

Taranaki Daily News, 15 October 1920, Page 5

WOOL SURPLUS.

SUPPLY EXCEEDS DEMAND. PRICES ENFORCE ECONOMY. GROWERS ADVISED TO HOLD: By Telcfrapu.—Press Association. Wellington, Last Night. Following is the text of a cable on the subject of the wool market in Britain received from the High Commissioner, and read by the Prime Minister in the House this afternoon: "With reference to jour, telegram of 20th August, Messrs. Hunt and Wilson have met the Director of Raw Materials, the committee of London wool brokers, the London and Colonial wool importers, Australian wool-growers, and others interested in the trade, and have now reported. The. report will be sent by mail, but, the following are the prin? cipal points:— : Firstly, stocks of Imperial Government Australian wool in the United Kingdom and elsewhere afloat and in Australia on Juno 30th, amounted to 2,040,177 bales; ditto New Zealand 58G.377 bales, roughly one and a half year's production, allowing for stocks which will he held in a normal year. The stock)! of Australasian wools qn June 30 were approximately 1,650,000 bales in excess of the stocks of South America at the same time, estimated at 200,000 bales, about normal, and South Africa 100,000 bales making a total of roughly 2,000,000 bales, an excess from which it seem-; that the world's wool production has gained on the world's consumption since the outbreak of war by about five months' growth. Secondly, since November, 19) 9, about seventeen months' growth of Australasian wool has been disposed of in 19J months, and it is evident the world's consumption has not equalled production since the armistice.

CHANGE ONLY GRADUAL Thirdly, war conditions forced prices to extreijie figures, and enforced economy in manufactured goods amongst the civil population. The purchasing power of the wool consuming population of Europe lias been enormously reduced, and to supply the impoverished nations with wool on an extended credit for liome consumption is difficult and risky, and a return to normal conditions can only be gradual. ' Fourthly, a reduction of the current Australian clip, estimated at -IfIQ.OOO bales, through drought, will assist the general position, but the most that can be hoped for in the immediate future is that the consumption will overtake production.

Fifthly, a surplus of 2,000,000 bales therefore must be held for a considerable time, and can only go in consumption gradually. TV problem, therefore, is to ensure its being held in sucli fi way as to minimise, as far as possible, its detrimental effect on the market. The problem is made more difficult from the New -Zealand standpoint by fashion, and the demand being strongly in favor of fine wools, 55 per cent of the New Zealand stocks are of a clam now selling badly, ns compared with (in per cent Australian. Thirtyfour per cent of New Zealand wools are fair selling lines, against 15 per cent of Australian, and 11 per cent are the best selling lines, as compared with 79 per cent."

SAFE TO HOLD. Sixthly, low crossbred wools are comparatively cheaper to-day than the majority of other raw products, arid pooncr or later must return to normal. It should be one of the safest things to hold. For all practical purposes wool can be regarded as an imperishable commodity. The Australian committee are endeavoring to assist the position by spreading the wools of the current Australian clip over a period of twelve months by limiting the amounts offered at Australian and London auctions. They anticipate that if the banks, brokers and growers work together the financial part of the holdover can be carried out without Government help, provided the Director of Raw Materials co-operates in feeding the market gradually with Imperial Government stocks. The New Zealand committee considers that similar control in the case of the Dominion can be carried out only by the Government, which course they do not recommend, because (firstly) while Australia is the dominant factor in fine wool production, New Zealand is not in crossbred, and if the Dominion attempted to withhold its clip, the result would be to, give the market to other crossbred pro-' ducing countries; (secondly) the crossbred clip is already spread over twelve months, as it is approximately half of the total produced in each hemisphere. Hence the committee consider any attempt at interference would result in more harm than good. ADVICE TO GROWERS. Seventhly, as the whole of the world's wool cannot go into consumption in th(! immediate future at any price, somobocly must hold a portion. The dominant factor at present is the Imperial Government, as the holder of the world's accumulated surplus. The Department has shown no desire unduly to force its wools on the market, and the committee suggest that the Government of New Zealand should request the Imperial Government urgently by telegram to give an undertaking not to unduly force its wool on the market, but to hold stocks firmly, and only place them on the marEct in such quantities as will be absorbed without seriously depressing prices. This would steady the position and restore confidence throughout the whole industry, and, apart from sentimental reasons, would benefit the Imperial Government, as a serious decline in crossbred values would hit the British Treasury. Eighthly, the committee think it ia clear from the above that crossbred wool has a future, and that if those growers financially able to do so hold their clips until the consumption and a change in fashion make more jmpresfiion on stocks, this will assist the whole position. Someone must hold the wool, and it is better for the financially strong growers to do bo rhftii for speculators to step in. The committee consider vlie New Zealand Government should make the whole position known to the. growers, and they urge those who can do so to hold back their wools as long a« possible. INCREASE EWE FLOORS. Ninthly, Now Zealaiid srowers could also assist the. market profitably to themselves by increasing the ewe flocks in country suitable, and so providing for an increase of meat, particularly

mini), the outlook for which the committee consider very good. Tenthly, no difficulty is anticipated in obtaining tonnage to move the New Zealand clip, but in addition to cheaper storage there arc advantages in holding .the wool in New Zealand, where it is not such a menace to the immediate future of the market as it would he if stored in London. The further capacity of London to receive and store wool is limited at the present moment, and hefore sending wool to London for sale growers should ascertain tbat it can be accommodated. If desirous of holding the grower should hold in New Zealand, only sending to London if they mean to meet the market and take what they can get for it within a reasonable time of its arrival. The New Zealand officials have hcen present at the meetings,' and generally concur in the recommendations contained in the report. Commenting on the report, Mr. Massey said nothing that could be done to help the position was beinj left undone by the Government.