Effect Of Argentine Devaluation On Wool

Press, Volume CIV, Issue 30737, 29 April 1965, Page 9

Effect Of Argentine Devaluation On Wool

The effect of the recent devaluation of the Argentine peso on the wool market is discussed in a wool trade report received from Australia this week. "Whether this 13.2 per cent devaluation will suffice to restore normality to the wool export market is not yet clear,” it says. “It is also not known whether the devaluation will be bracketed with other Government taxes and measures in the pattern set by Uruguay a few weeks ago. It is, however, to be hoped that this does not prove yet another damp squib of the 'too little and too late variety.’

"It is in the interest of the whole trade everywhere that the large accumulations of wool in Argentina and Uruguay should be liquidated and cease to be a bogey deterring buyers of current clips. The Government is known to be eager to clear the accumulation of wool end to be anxious to restart the inward flow of foreign exchange. ‘The exportable surplus for the 1964-65 season (carry-over from the last season plus current clip, less domestic requirements) amounted to 159.000 metric tons, but exports this season to the end of March amounted to only 58.824 tons—not quite onethird

"It is too early to make any valid assessment of the ultimate effects of the new exchange rates. So far local

prices have risen only about 6 per cent, which leaves growers unsatisfied and still unwilling to sell. It is likely, therefore, that the first effect of the devaluation will be to clear stocks held by dealers

and exporters. This will probably result in about 10,000 metric tons being shipped within the next two weeks.

“If world wool values do not fall in the near future, it is possible that the final adjustment to the devaluation will bring more wool on to the export market; at least dealers and exporters will shortly be liquid again and therefore once more able to take a position.” The same report says that the recent devaluation has apparently had some beneficial effect in Uruguay, in spite of the additional taxes and restrictions announced at the same time. The wool market is said to he rather more active with a firming price trend. Unsold stocks show no significant reduction, however, and are stated to be still between 50,000 and 60,000 metric tons.