Wool’s battle for markets

Press, Volume CXI, Issue 32775, 27 November 1971, Page 16

Wool’s battle for markets

The cheerless comments of the managing director of the International Wool Secretariat (Mr A. C. B. Maiden) on the outlook for wool when he was interviewed in Christchurch this week apply only to the market for finer wools, particularly Australian merino. Mr Maiden said he could not see much chance of improvement in wool prices until the currency problem had been resolved and the surcharge on United States imports of raw apparel wool had been removed. Merino wool, despite heavy buying by the Australian Wool Commission, is 5 per cent to 7 per cent cheaper than it was a year ago, and the factors mentioned by Mr Maiden may have contributed to this decline.

New Zealand wool, however, is dearer than it was 12 months ago. Sale by sale, the average prices realised in recent weeks have been 71 to 10 per cent higher than the prices realised at the same sales last year: some of the coarser grades are as much as 10 per cent higher. Admittedly, last season’s average—s 3 cents per kilogram, or 24 cents per lb—was depressingly low; but it should be noted that the downward trend of the last two years has at least been checked. If the present level of prices is maintained throughout the season growers can expect their wool cheques to gross rather more than in 1968-69.

The measures announced by President Nixon on August 15 have not affected fine wools and coarse wools equally. The 10 per cent surcharge on United States imports affects apparel wools, but not carpet wools; and most of New Zealand’s exports to the United States are carpet wools. The realignment of currency par values since August 15 has pushed the yen up about 6 per cent in terms of the New Zealand dollar, while the United States dollar has lost about 3 per cent; sterling area currencies have floated together, and several of the European currencies have appreciated slightly. As Australia’s main market for wool is Japan these currency movements have, in effect, made wool cheaper in Japan than before.

If Japanese buyers expect a further appreciation of the yen—the “ considerable uncertainty ” referred to by Mr Maiden—they may hope to buy Australian wool even more cheaply in the near future. But the growing stockpile of Australian wool must be an even more important influence in this market. The New Zealand stockpile, on the other hand, has been steadily reduced and is now less than half what it was two years ago. In short, there are more differences than similarities in the shortterm markets for fine and coarse wools. Mr Maiden is an Australian: but in his position he could have been expected to make the distinction when speaking to a New Zealand audience.