Wool prospects “still gloomy”

Press, Volume CXIV, Issue 33655, 3 October 1974, Page 14

Wool prospects “still gloomy”

“Still gloomy,” says the latest newsletter of the Wool Board in examining the prospects for wool — not a very encouraging climate for the start of the first sale since devaluation in Christchurch this morning.

The newsletter, however, was probably prepared before devaluation. Economic problems in major consuming countries —to a marked degree attributable to oil prices — remain the major bugbear. “Lack of finance in consuming countries continues to bedevil the wool market,” says the newsletter. “A significant recovery in prices is unlikely before Christmas. Hopefully, there will be some upward movement in the New Year, but even that may only be slight. "Although there may be a recovery in the growth of economic activity in many major consuming nations, strong competition from syn-

ithetic fibres and increased 'wool production may dampen : the effects of higher demand. I FINE WOOLS “This is a consensus of j several informed views from ! trade sources.” The outlook for fine wools remains sombre. After the Australian devaluation, the “Australian Financial Review” said that the effective 12 per cent drop in the floor price for wool had produced no additional demand. In contrast to the situation in 1966-67, when the last slump in the wool market set in, the finer wools have had the worst of the market this time. The coarser wools have fared better. The initial sign of recovery in the market would be a return to a position where the Wool Marketing Corporation no longer needed to intervene on its recent scale — but for that to happen there would have to be a quite marked improvement in demand, and in the face of present economic trends in consuming countries, this is not immediately obvious.

By the Dunedin sale at the middle of last month, the corporation had bid on 63,000 bales of auction offerings this season—about 60 per cent —and had bought about 21,800 bales. But there have been significant sales of this wool since, the newsletter says.

In Australia, the National Council of Wool Selling Brokers said recently that the trade continued to view the prospects for the next three months with deep gloom. CO-OPERATION NEEDED The council quoted the annual report of the International Monetary Fund which said that international co-operation was desperately needed. “If this does not occur, we will experience an intensification of the woes presently afflicting us: a virulent and widespread inflation, a deceleration of economic growth in reaction to the preceding high rate of expansion, and a massive disequilibrium in international payments,” the I.M.F. said. These were precisely the conditions that destroyed growth prospects in the world wool textile industry, the council said.