WOOL MARKETS.

Auckland Star, Volume LXXI, Issue 71, 25 March 1940, Page 6

WOOL MARKETS.

BRITISH PURCHASE. EFFECT ON OTHER BUYERS. NEW ZEALAND MAT LOSE TRADE. (By GOLDEN FLEECE). The purchase of the New Zealand wool production by the British Government has assured New Zealand of a market for its wool for the duration of the war and one year thereafter. Looking at this arrangement in a broad way, it is satisfactory to New Zealand producers that the responsibility of marketing the entire production during a difficult period has been taken from them. To most interested people the purchase price is satisfactory. The dissatisfied minority must realise that the alternative to the purchase of the clip by the Imperial authorities was an o|»eii market. No doubt the bulk of New Zealand's wool would have found ready purchasers at prices which would have averaged higher than 12Jd per lb in an open market, but the shipment of purchases by individual firms would have presented grave difficulties. These difficulties would have eventually been such that buyers would hare withdrawn from the market unless they were assured of reasonably quick shipment. With this aseuran c lacking a good proportion of New Zc.iland's wool production would have been unsaleable and would have become a frozen asset 6tored in New Zealand. The producers of New Zealand have sold their production on satisfactory terms; their only concern is "what is happening to our former markets." Tn peace time Xew Zealand wool was shipped to every consuming country in the world. These British and foreign outlets were built up by the enterprise of manufacturers in those countries and their resident New Zealand agents, and have been of great value to New Zealand. Those countries are still requiring New Zealand wool and are anxious to obtain supplies. If these supplies are not forthcoming they must look elsewhere. The main competitior to New Zealand is the South American market, and those i: < of Xew Zealand wools who are iKJ.:: -starved of supplies from this counti,\ '• ! i\i< a' eady turned their attention to that "•aiUct, and large quantities have been bought in South America which normally would have been purchased in New Zealand. Synthetic Fibres. The other competitor to New Zealand wool is the various synthetic fibres, the standard of manufacturing of which has greatly improved during recent years.

with a consequent widening of demand. It w not suggested at thus, stage tliat synthetic fibre-; will necessarily have an adverse effect on the demaml for wool. The intricacies of manufacturing are such that a manufacturer having established a satisfactory Wend incorporating artificial fibres will not readily change his blends. The influencing features will be the dearness of the fibres or the cheapness of wool, and even then the chanjro orer cannot bo made at short notice. The ]>oint of that is that when this war its over this country' will be faced with the difficulty of regaining market* lost through diversion to other source* of supply, natural or artificial. The Xew Zealand wool production during 1914-18 was approximately 560,000 bales a year. At the end of the commandeer there were in hand orer one million bales of unsold wool and a new clip to be marketed. The disastrous effect of the situation on wool prices is history. To-day the wool production of Xew Zealand is approximately 800,000 bales. This increased production is not confined to Xew Zealand by any means, and at present the world's supply of wool must lie considerably in excess of the 1014-18 figures. Consumption of wool has, <>f course, increased, but to, maintain the rate of consumption it is ensseiitial that users be supplied with their requirements, otherwise, as pointed out previously, they must turn to substitutes. Fear of a Surplus. The English Government baa purchased the entire Xew Zealand production and that portion which is not required in England will be sold elsewhere. Admitting that England's requirement* must be difficult to estimate, it seems improbable that she can use the entire purchase, and it must be Xew Zealand's fear that a surplus, with its depressing effect on the market, is in the process of being built up. In the meantime Australia, Canada, United States of America, Japan and some Continental countries are clamourin;; for Xew Zealand wool. The prices at which they are prepared to buy will represent a considerable profit over the United Kingdom purchase price. By the terms of the agreement of sale between the English and New Zealand Governments, half of this profit would revert to Xew Zealand. Unless this question of allocations to other countries is finalised quickly, those users who cannot obtain supplies will look to other sources of supply, and profit will be lost to Xew Zealand. With it all looms the possibility of a budding surplus of wool in certain grades, and the certainty of lost markets. Every fair-minded person will admit of the difficulties of the English Wool Control in handling the gigantic task of purchasing and distributing a considerable portion of the world's wood production, but Xew Zealand's concern regarding the retention of her markets should be put in front of the English Control. In all probability this has already been done by our authorities, and it is hoped that an agreement will be reached j whereby Xew Zealand will be allocated a certain quantity which she can ration out to her former customers through the normal trade channels at prices fixed by the English Control. The Canadian trade requirements are to a great extent being taken care of— sales to America arc of paramount importance at the present time, and it is felt that every endeavour should be mado to satisfy that country* urgent requirements, at least in part if the whole is impossible. The Australian Wool Con t nil has already the direct handling of supplies to allied and neutral countries, and it is urgently necessary that a similar arrangement with regard to Xew Zealand and her customers should be consummated.