PRICES FOR MEAT

Ashburton Guardian, Volume 55, Issue 242, 26 July 1935, Page 6

PRICES FOR MEAT

DISPARITY IN QUOTATIONS.

POSITION ON LONDON MARKET. AN INTERESTING LETTER. The question of prices of export meat Avas again before the Mid-Canter-bury Provincial Executive of the Farmers’ Union this moniing, Avhen an interesting letter regarding the meat position Avas received from a firm of exporters.

Several A r ery long letters Avere received from freezing companies, replying to the executive’s letter asking Avhy there Avas a difference in the published schedule of prices in the newspapers and the prices obtained in London. It Avas pointed out that the difference arose through the Union Oompanyj spot ,and forward markets. The producers had this year actually received more than the published prices. The business to-day, it Avas pointed out, Avas a most speculative one, and the figures published Avere estimates of Avhat the meat Avas Avorth Avhen purchased. The Meat Board did not take into account the financing: of the meat from the time of purchase till its arrival on. the market,* and the freezing charges Avere computed on a basis that Avas beloAV that ruling in Canterbury. The President stated that in Wellington, Sir William Perry had told him that the published prices Avere not the true Loudon parity. They did not include the cost of droving and freight to the Avorks, nor interest on the financing of the transactions. No sales Avere being made by cable to-day. The published prices Avere merely a guide. Mr G. A. Franks said that ho and Mr ’W. R. Hammond) had Avaited on one of the freezing companies in regard to the question, and had arranged for an address to be given to the executive th/y afternoon, Avhen all information available would be given to members. # A Fallacious Idea. Messrs Nicoll Brothers, Ashburton, Avrote in regard to this question and said that as exporters Avdio did not oAvn freezing works, but Avho operated extensively throughout Canterbury and elseAvheie, it had suggested itself to the firm that the farmers might Avish to hear its vieAVs. “In the first place,” the letter said, “it seems recently to have become a fixed idea in the \ minds of some (Ave submit quite erroneously) that the price paid by the exporter from Aveek to week should be in accord with current London parity—a glance backAvard through this season will quickly shoAV hoAV fallacious this idea is, and how impossible it Avould be over any period to carry on business on such lilies.

‘ ‘The weekly parity statement is, after all, merely a comparative set of figures, and neither the Meat Board nor anyone who has any knowledge of the Home market and its unexpected fluctuations would! .suggest that it should be the basis for buying operations at this end. As a matter of fact, the overall prices during the season have been for the most part above parity, there having appeared to be a possibility that the Home market would justify our action, but this has unfortunately resulted in serious disappointment, as any will l know who consigned their stock on their own account, whereas the position recently has shown the likelihood (based on sound reasons which are referred to later) that there must he grave doubts as to the state of the markets when the meat bought at the latei schedule arrives in London. Difficulties of Exporters. “It must be borne in mind that the meat is rarely realisable much under 10 weeks after killing, and sometimes more, for difficulties often arise as to shipping‘arrangements and the allotment of freight—if any exporter found himself in the position, geneially, of being able to sell daily, or even his weekly purchases immediately after killing, at a price commensurate with the value ruling in London at the time, then there would be some justification for the claim made for parity prices, but such a procedure, except on the rarest occasions, is not possible—it is certainly not possible at present. Therefore the exporter, when fixing the price he is prepared to P a y> has to examine the whole position, particularly in relation to future piospects, and especially as to the probable market when the meat arrives at the other end.

“We are aware that two points have impressed themselves recently on the minds of a section of the farming community, and these are: (1) The disparity between the Meat Board’s estimate of value, based on the current London market, and) the overall prices being offered here, and (2) the fact that the difference has been bridged by the schedule put out from! a certain quarter for a restricted quantity. With this latter point we are not concerned; there may be reasons behind the quotation of higher prices.

Unwillingness to Buy. “In a competitive buying business, one lias to look after oneself, and our duty seems to begin and end in offering the highest price which the future market seems to justify, and this brings us hack to the first point mentioned above, i.e., the fact that the bulk of the. export buyers liave not in the past few weeks been willing to buy at current London parity, the fanning community quite reasonably asks why, and they are entitled to a reply. In the first place we cannot agree with the fairness-of the Meat Board’s parity statement as applied to Canterbury conditions, but that is to some extent' aside from the question at issue. “The main reason for the difference is simply the fact that the export trade has put little confidence in the

probable state of the market when the meat recently bought arrives Home. We and other exporters have to keep in the closest possible touch with the trend of the markets, and information sent to us from time to time enables us sometimes to form a rough idea as to the future, 'but let it be said at once that the market is not so easily forecast as some people think, but there are occasions when certain factors operate which must be given serious consideration, and we have that position in a marked degree at present. The statistical position is not good, in that stocks in store in London are enormously in excess of normal figures, and seem to show signs of increasing. With but a few more weeks of the best part of the selling season at Home, the early commencement of the Australian season, and the likelihood 1 of large supplies of Home-killed, added to the excessive stocks, is it any wonder that the exporter is not very anxious to pay more for his goods than he considers they may be reasonably worth? “So far as present London values are concerned, they are only being maintained by firm holding on the part of a section of the trade at the other end, but the position is hot healthy, and a break at any moment is not outside the bounds of probability. “In conclusion, we may say that in our experience the basis of overall prices, .as well as any movement, whether upwards or downwards, has always been governed by prospective Home market values, and we believe it will be accepted that this is as it should be.”