HOW WOOL VALUES ARE MADE.

Sun (Christchurch), Volume I, Issue 64, 22 April 1914, Page 11

HOW WOOL VALUES ARE MADE.

THE METHODS OF BUYERS. V The fact that so much of the general prosperity of. the State is dependent upon the level of prices for our staple product, and that seldom does the same currency prevail for two consecutive seasons, affords interest to a discussion of what is the real value of wool and how it is determined by buyers. As a matter of fact, wool has no fixed value, and cannot possibly have such a thing in the same way as we can fix the value of a sovereign, for instance. The value of wool is changing every day —possibly every hour. It is at all times only worth w r iiat buyers are prepared to give for it, and the conditions which influence buyers are really the reflex of the general prosperity or otherwise of the world and his w T ife who wear the finished article. .The influence of the volume of supplies is no doubt great, and the variation here adds to the uncertainty of the whole thing, but the general state of the world's trade must always be the great criterion. In determining what the value of wool will be when it reaches its destination', the buyer is as much in the dark as is the owner when he is shearing the sheep. It is at all times impossible to foretell the future, and purchases tlie buyer may one day regard as cheap may before long prove to be dear, and vice-versa. Were it otherwise it would be an easy matter to accumulate a fortune in a season or two; yet buyers, spend their lives at their calling and frequently suffer defeat in that end.

It is interesting to note the' methods adopted by buyers in estimating the current value of wool. We will suppose he is armed with certain limits for different classes-of the staple; but these limits are not so much per lb for fleece, broken, pieces, bellies, or locks, but are for wool of a certain quality in an absolutely clean state, landed at their ultimate destination in Bradford, or in .France, Germany, Belgium, or elsewhere, as the case may be. Thus the first task iof the buyer is to estimate the quality of the lot he is valuing, find here it must, not be forgotten that there are a number of different l qualities, even in a lot of well-prepared wool. Thus, if we were permitted to compare the logues of leading buyers after they had written down their valuations, we would find a great many different opinions as to the value of "tfte average quality of any given lot of wool. It is really a difference of opinion, and when experts differ it is impossible to came to a hard-and-fast decision. One buyer will probably estimate that a certain lot of wool contains more of one/ quality than | another, and even aftSr quality is decided there is,the important, question of yield to be considered—that is to say, the quantity of clean, scoured wool that will be left after the yolk and all extraneous matter has been removed. Here, again, there is naturally a great diversity of opinion, for. one expert will estimate that a lot of wool will yield, say, 4.5 per cent., while others may put it at 44 or 42, and so on; so that, even if there were no variation in the clean, j scoured basis, there would still be con- I siderable fluctuation in wool values. Then we have to take into consideration the fact that freight, exchange, insurance, and other charges incidental to shipping, which must necessarily be added to the l)asis . at which the user requires the wool, fluctuate from week to week, and result in corresponding fluctuation in the prices bid at auctiou. Again, a buyer may have a special order for a particular quality, and may even have instructions to purchase a certain quantity of a given quality at the best price lie can, and, while he is filling that , order, that particular class of wool is affected. Naturally he bids freely for all suitable parcels, but the.moment his order is filled his competition falls off, and there is a reflection in the value of the wool. From a grower's point of view, this is often marked where a buyer bids a certain price for wool which is passed in as under the owner's reserve, and after the grower has been consulted, and decided to accept the price, it is found t'hat the buyer, having filled his special order, cannot give the same price he had bid before. One can easily see, therefore, that the task of the wool valuer under such conditions is a most difficult one, aiid this explains why brokers' valuations, notwithstanding that they are made by highly trained and expert men, are, after all, but approximate estimates. Subsequent realisations at auction may prove he was right, or was a shade under or above. lie has gone as near to the mark as is humanly possible, but growers will realise that, under the conditions mentioned above it is impossible for him to say positively that | at a certain sale, perhaps weeks ahead, j a certain price will be obtained. How much more difficult must it therefore be for an owner to fix the value of his wool by a hard and fast reserve 1 ? If growers generally would see the wisdom of allowing a certain discretion, to the selling broker in the matter of price, they would not be so frequently disappointed at finding after j they have been communicated with, j and have decided upon reflection to accept the prices bid at auction, that the I buyers will not stand to their bids.