THE LONDON MARKET.

Waikato Times, Volume 107, Issue 17985, 2 April 1930, Page 3

THE LONDON MARKET.

BUTTER PRICES DECLINE. INCREASE IN PRODUCTION. STRONG “BEAR" MOVEMENT. 'Hie period from the middle of February to March 20 has witnessed a further decline in quotations of butter on t-hle London market, according to Mr W. Goodf.ellow, managing director of Amalgamated Dairies, Ltd., in his monthly report appearing in this month’s issue of the Dairyfarmer. Continuing, the report states: —On February 22 our London manager reported that, after activity, the market closed steady at 148 s. This price warranted a reduction in the retail price to Is 6d, which it was anticipated would bring about a large in-, crease in the consumption, but the improvement has been negligible. Meantime, the big buying groups have forced prices down to 136 s (to-day's cable) for New Zealand finest. The buyers nominated 141 s as their price for last week’s deliveries, and 140 s for the current week. We believe that the buyers did not anticipate prices going lower than 148 s, and some of them incurred heavy losses when the market dropped to 1365. They have now realised their strength, and meantime are only buying their immediate requirements. As a matter of fact, there is no reason why the market should not fall to 130 s or less, if the big buying group desire it. A few factories are evidently taking their butter off the market, as approximately 2500 tons have been withheld. Whether this action is advisable generally is problematical, as a general hold up of supplies might reach too large dimensions and, without sales continue, possibly cause a disastrous reaction. The fact must not be overlooked that there is a very large increase in production both in New Zealand and Australia, and further, the general world stock position is very heavy. For example, stocks in the U.S.A. on January 1, 1930, were over .40,000 tons and 17,000 tons heavier than last year.

Strong “ Bear ” Movement. There is evidence of a strong "bear" movement' in London at present, and undoubtedly prices are far too low, but, in view of all the circumstances, we are of the opinion that it will be some time before prices will recover to a figure that might be regarded as satisfactory from a point of view. During the past two years drought conditions in Australia and the Argentine created a temporary world shortage, and the factories received abnormal prices. Now the Londorj market is well supplied, and, with little or no competitive buying, the big multiple shops name the price whioh they will pay The present competitive method” of selling colonial dairy produce in London is the main cause of the present extremely low prices. Excessive competition in selling any class of goods, to a limited number of wellorganised buyers,, must result in lower prices. The only way to obtain fair • values is to meet combined buying with group selling. ‘The question has been repeatedly asked, what oan New Zealand do anyway, with only 20 per cent of the butter imported into the United Kingdom? This statement is entirely misleading, for the very simple reason that New Zealand does not sell its butter In equal quantities throughout the year. The flush months’ production Is sold In the United Kingdom from January to April Inclusive, and during these months It represents approximately 50 per cent, not 20 per cent, of the total butter imported into Great Britain. Further, such butter j is sold in London and the South of j England, whereas Danish has a virtual monopoly in the Midlands and the ; North of England. It is, therefore, 1 fairly safe to say that ' approximately j 80 per cent of the butter used in Lon- ; don and the South of England during ; January to April is imported from ; Australia and New Zealand! These j are the months when the major por- j lion of our production has to be dis- ,

posed of in the United Kingdom. To say that • Australia and New Zealand, doing 80 per cent of the butter business in a definite area, cannot do anything to market their produce in a business-like manner, is, to put it inl'ldly, an absurdity, and to continue the present extremely competitive selling system is little short ot stupidity. Weekly Prices and Deliveries.

Weekly prices, deliveries and stocks have been as follows (last year’s figures In parentheses) : Week ended February 22. —Anchor, 148 s (170 s); Danish, 174 s (191 s); London-deliveries N.Z., 1316 (1617); London stocks N.Z., 4141 (2891). Week ended March I.—Anchor, 146 s (170 s); Danish, 172 s (186 s); London deliveries N.Z., 1245 (1890); London stocks N.Z., 4259 (2837). Week ended March B.—Anchor, 140 s (1725); Danish, 164 s (186 s); London deliveries N.Z., 1603 (2012); London stocks N.Z., 7034 (3757). Week ended March 15.—Anchor, 142 s (168 s); Danish, 158 s (182 s); London deliveries N.Z., 1498 (1244); London stocks N.Z., 6646 (2627). Average weekly delivery, 1415 tons. Average weekly delivery previous month, 1391 tons. Cheese. It would seem that an improvement in the market is due, but the butter decline has undoubtedly affected the cheese position. Price declined from 86s on February 22 to 81s by March 13, and heavy clearances were made at the latter figure, and the market thereafter moved up to 84s with a healthy demand. Weekly prices have been as follows: Week ended February 22.—Improving demand; white 86s to 87s, last year 85s; coloured 84s to 85s; Canadian, 96s to 98s. Week ended March I.—Market slow: white 86s, last year 89s to 90s; coloured, 85s; Canadian, 95s to 98s. Week ended March B.—Demand slow’; white 82s, last year 89s to 90s; coloured S2s; Canadian, 94s to 9Ss. Week ended March 15.—Market firm but quiet; white 84s, last year 88s; coloured, 85s; Canadian 95s to 98s.