Many Reasons For Wool Price Decline

Press, Volume XCIX, Issue 29344, 25 October 1960, Page 18

Many Reasons For Wool Price Decline

(Special Correspondent N.Z.P.A.)

(Rec. 8 pjn.) LONDON, October 24.

“It is difficult, in fact impossible, to pinpoint the reasons for the new slump in wool prices,” says Mr F. S. Arthur, Landon agent of the New Zealand Wool Commission. Of all the raw commodities which entered international trade, wool, from a price point of view, was probably the most unpredictable. It was always subject to considerable fluctuation from one season to another and there were as many factors which would seem to influence a decline as there were in the reverse direction.

“World wool production and machinery consumption are approximately in balance, although consumption is tending to decline, and as a result there appears no pressure on supplies,” he said. “On the other hand, retail sales of wool textiles are being maintained at a high level and with full employment, except in certain pockets of industry, and a rising tendency in wage levels, there is no reason to think this level of retail sales will suffer much reduction. ‘ ‘There is, however, a genera] feeling of uncertainty about price levels in all wool-consuming countries and the tendency in all sections of the industry has been to reduce stocks and buy from hand to mouith,” Mr Arthur said. “This is a well-known cyclical pattern in the wool textile industry and the fall in machinery “consumption in 1957-58 and

1958-59 of about 14 per cent., which brought with it a fall in wool prices of '3O to 40 per cent., was largely the result of a worldwide destocking movement. One

hopes the present destocking movement will not be so prolonged, but present indications, are that it will be some time before a settled basis of values is found in New Zealand and confidence sufficiently restored to stimulate active general buying.” Mr Arthur emphasised the New Zealand commission’s role as a sheet anchor for the New Zealand grower and more particularly at the present time for the high country grower. The drop in price in recent New Zealand wool sales would undoubtedly have been a good deal more but for the commission’s firm support. What happened when there was no support could be seen in Aus-’ tralia, where prices were 15 to 20 per cent, below corresponding sales last year. During 1957-58 and 1958-59, he said, the commission was called on to support the market and in so doing bought 96,000 bales which, at the 1959-60 season, had been sold at a profit of anfither £500,000. Already the commission was faced again with' the necessity for further support—a significant reflection of the instability of the wool market.