Lower Wool Prices

Press, Volume LXXIII, Issue 22262, 29 November 1937, Page 10

Lower Wool Prices

Mainly because a good demand developed from France and Belgium, prices at the Auckland wool sale on Saturday, the first of the Dominion series for this season, were not as low as many of those most closely in touch with the trade expected. Prices were, however, low enough to compare disappointingly with those of the exceptionally prosperous season just closed. The course of the market at Bradford in recent months and the continually declining value of wool in Australia since the Commonwealth season opened at the end of August have to some extent prepared growers and brokers for the fall. It must be remembered that the beginning of the New Zealand season last year was quite out of the ordinary in that the Japanese were faced with the need to fill the raw wool requirements of a large and growing textile export industry without recourse to the Australian market, and that they paid prices without apparent regard for ordinary trading considerations. There, was, therefore, a hysterical tone about the earlier sales that most growers discounted; and they will be spared, accordingly, the worst shock of the present contrast. That the buying pressure in the wool market has been small has been clearly demonstrated at recent Australian and London sales by the concentration of buyers on quality. Where good quality wools have been offered, there has been a keen demand, though within restricted limits; but in any inferior wools buyers have shown a decided lack of interest. The Auckland sale gives only a general indication of what is likely to happen in the rest of New Zealand, particularly in Canterbury and Otago, where the main fine wool clips are sold; but it is obvious that values will be very considerably down, probably for the greater part of the season. The substantial participation of France and Belgium is a sustaining factor, especially as these two countries bought rather less New Zealand wool last season than usual; but German competition is so far wanting, and a cable message printed this morning indicates that Italy will be only a very small buyer. Japan remains an unknown factor. Japanese stocks of wool are not heavy, and the textile industry has shown clear signs of restiveness at the reduction of imports decreed by the authorities. Japan may yet come in. The position of the wool market is at present completely paradoxical. World stocks of wool are short, considerably more so than usual, and every indication points to a market almost as strong as that of last year. However, the uncertainty that has disorganised trade in almost all primary products recently appears to have gripped the wool market, and until that uncertainty disappears wool will probably remain at low prices. The situation is not in any way comparable with that which existed when prices fell disastrously in 1930. At that time, unemployment throughout the world was becoming

increasingly serious and every country found poverty rapidly replacing prosperity. Now, almost every country reports increasing employment and prosperity at a high level. The wool market, like most other markets, happens at present to be out of step. The immediate outlook appears to be for considerably reduced values for wool; but the prices received in Auckland indicate that the fall has not been bad enough to be classed as disastrous.