WOOL MARKETING

Dominion, Volume 25, Issue 63, 8 December 1931, Page 6

WOOL MARKETING

London or New Zealand? CORRESPONDENTS’ VIEWS To the Editor. Sir, —Those handling wool for sale in New Zealand have made great use of their opportunity to build up the local sales since the commandeer days. They have done it well and used every piece of propaganda and publicity possible to favour their cause. It is granted the local sales are excellent for the town in which they are held, for wool buyers are good spenders, also the farmers who come to town to witness the sales in times of plenty. The more the farmer has to spend, the better for everybody, so I contend it is wisest to sell wool in,. London, where it meets world competition in the world’s financial centre. Finance for large sums of money can surely be more easily arranged in London than any town in New Zealand. It is a matter for the farmer where he sells his wool, but there are few who have tested the market so thoroughly as the writer and fewer who work their costs to two decimals of a penny. The first test was in 1924, when wool was very high. In fear of the market falling some wool that was not on the boat was diverted to Wellington for sfle in December, 1924. The drop •in price came between December, 1924, and January sale in London in 1925, which gave Wellington a distinct advantage. The clip had been classed into nine lots and some of each was offered nt both sales. In that year the cost to ship was 3.11 pence per pound and a penny to sell locally. The local sale, with its advantage, could only net more on two of the nine lots offered, and they were the two smallest lots. The two main lots of fleece wool made a net profit per pound in favour of London of 2.14 and 2.39 pence (after a drop in the market), and the remaining lots made a profit down to .39 of a penny on locks. This after allowing 6 per cent on the money from prompt date Wellington and receipt of money from London. Mr. Hammond will say this is an isolated case, but the two sales have been tested every year except last year, and even by giving the local sale every adv vantage it is a poor loser. It is only tests like these that.count and very few take the trouble to carry them out. To'say local sales are above or equal to London parity may be correct in isolated cases, but 'as a general rule a genuine wool buyer does not pay more • than bis firm can probably buy the wool • for, in London or that the article is worth. Storage charges may be cheaper here with more firms brokering wool in Wellington than London, but it is the net result that should-count. The control by the grower is eyewash because it is. doubtful if any growers have the technical knowledge to value their wool on a clean scoured basis. They can only guess, and many are worried to-day because they did not accept a fair price on the market when it was offered. As a general rule once wool is passed in, money is generally lost on it—quite an important point. The exchange last season was worth Id per lb. Would the buyers give id more than the wool is worth in London? If New Zealand is such a good market, why do all. the freezing companies sell ,in London? ; . Can buyers pay London parity in cash at least three months .ahead of consumption? It has been this forward buying that, has killed the speculator and caused such losses that have been quite a factor in the present state of the trade. ' Regarding prompt payment: the farmer can only shear his sheep once a year, be it in November or June, and London money is available by cable at least 14 days from date of sale—-and the banks will always advance on wool on the water. ... If the growers worked their returns thoroughly and despite the heavy costs of shipping, 2d and over, they and the wool trade would soon be wealthier by selling in London, the world’s market for wool and money.—l am, etc., _ ALFRED RAMSDEN. • /Kumeroa, H. 8., November 25.

Sir, —The enclosed letter, issued by a brunch of the Bank of New Zealand, ia rather instructive front the business point of view, but most depressing from the Dominion’s seasonal employment outlook. In the instructions form delivered by the bank annually to farmers, and in which they are requested to state approximately the number of bales of wool, carcases of meat and other produce, farmers have this year been specially requested to .agree to a plan of marketing all wool produced, : n London, thus closing down local sales. The bank is doubtful whether the grower in this country is deriving the full benefit of the prevailing exchange, and whether the uncertainty of monetary conditions does not effect detrimentally the foreign buyer in the local market. . Because of this doubtful state of affairs the bank has undertaken to almost persuade the wool growers, by free storage and other methods, to abandon the local marketing of wool. They have built Upon the basis of doubt a brighter business in London than in New Zealand, and have forgotten that to remove the sales from the Dominion to London would deprive the casual worker of New Zealand of employment. Each year about 8000 men are employed handling the wool clip for sale and shipping, and about £BO,OOO is paid in wages (in the stores and shipping alone)- . If the wool is marketed in London then the wages for preparing for sales will be nnid in and spent for London. —I am, etc., JOHN TUCKER, Secretary. Storemen and Packers’ Union. Wellington, November 28.

[The letter referred to is dated October 7, 1931, and reads as follows:—‘‘We are enclosing the usual owners’ instruction form in connection with produce business, which kindly complete and return to us as early as possible. . . . Regarding the method o’f disposal of your wool clip, we are very frequently asked by growers whether they should sell their wool locally or in London. The bank arranges for the sale of wool in either local or Loudon markets, as has been done in the past according to owner’s wishes. There seems to be every indication, however, that the London sales will prove the better market to sell in. It is doubtful whether selling locally derives full benefit from the prevailing exchange rates. If sold in London the wool carries the full rates, to the benefit of the grower. Owing to the extreme uncertainty of monetary conditions, foreign buyers in local market no doubt will be operating warily. London after all is the true central market, to which wool manufacturers look for their supplies, and why should the grower not obtain the full benefit there, instead of disposing of his clip in New Zealand to be resold in London by speculators as is so often done? Experience hns' shown that the course, of the market cannot be foretold to any degree of certainty, and the practice of meeting the market consistently is-a wise procedure. It seems probable, however, that the market will improve gradually and those growers who desire to delay.offering their clips in London, at a minimum of expense, could transport the woo] to the shipping company’s stores (where free storage for six weeks is allowed), have it shipped by a vessel around the New Zealand coast for another three weeks, and eventually land in London, in. say. fourteen weeks from the time of shearing, at no cost for storage.',Tn London 12 weeks’ free storage is provided for in the consolidated rate; thus. say. 2C weeks’ delay without cost could be accomplished with a little judicious arrangement. Anv consignments going forward to London for sale are handled, by our own London office which has a fully-equipped produce department in charge of n qualified expert in nil classes of the trade, and customers consigning meat, wool or any, other produce to that, quarter can rest assured that their interest will besptoperly guarded. Should a customer desire sales to he effected through n particular broker, this course can be arranged nt no extra cost with proper supervision hr the bank in our customers’ interest/ As in the past we .shall be pleased to advise you by letter or discuss any points which you are not clear about if you notify us of your requirementaJ