PRICES WE MAY EXPECT

Dominion, Volume 30, Issue 190, 8 May 1937, Page 15

PRICES WE MAY EXPECT

The outstanding overseas news this past week has been that of the stock exchange slump in London and New York. A loss of £1,000.000.000 in London was reported; such a huge loss, even of “paper” profits, is not to be lightly regarded. What tearing has this, if any, upon our outlook'.' From a con sideration of the factors involved it would appear to have little bearing. The deflation in London and elsewhere was "blowing the froth off” a rise that was otherwise sound. Sound recovery had brought a steady rise in prices of all commodities, spread over the past two years; but during the past six months there had been a feverish rise and prices tended to get out of hand. This was influenced largely by Britain’s rearmament policy, although other factors played a part. The effects were felt principally in metals and in stock of steel manufacturing concerns. Except for wool, New Zealand products had not partaken in the recent “boomlet.” As they rose not, so will , they be unlikely to fall. Price forecasting is difficult and uncertain, yet all farmers must to some degree assume the role of prophets, even though for themselves alone. What prices may we expect for next season’s produce? None can foretell; but a reasonable assumption can be made. Wool has this season reached what Dawsons described recently as “fearsome heights.” Knowing the ways of wool, its own peculiar vagaries as to price, it would be wise to assume that it will be cheaper next year. It may be higher—that is quite possible; but a return to a 1/- or 1/1 for medium crossbred would be a reasonable expectation. Meal has been a very steady commodity these past two seasons. Fat lambs and sheep commanded an enhanced price this season owing to woo! prices raising skin values. Allowing that wool recedes moderately next season, we might anticipate still getting this season’s prices for fat sheep and lambs. The reason for this is that world prices are on an upward trend and may be expected to raise meat values sufficiently to overcome the expected wool easing. Reasonable expectations for next season may be stated as follows: —Lamb, Bjd. to 84d. lb. for main drafts; wethers. 24/- for two-tooths. off shears, for export; fat ewes for export, 17/-. Beef may be expected to maintain present values, which have altered little for the past two seasons. Dairy produce has risen steadily for the past three or four years. The 1934-35 average London butter quotation was 78/- for New Zealand. Last season’s was 97/10. This season’s should be around 105/-. If the signs be true, a still higher price may be anticipated next season, possibly 110/- or 112/-; on a free market that would return farmers 13Jd- lb. fat on present factory and shipping costs. As the guaranteed price may be considered as certain to be in operation next season the London values are not of immediate concern to the producer. He cannot, however, expect not to be influenced by them in the long run. It will be observed that reference has been made to a rising level of prices. The reference is to something quite apart from rearmament. If that be allowed to influence prices to a marked degree, which is problematical, an additional rise will ensue. A rising price level is part and parcel of world recovery and is to a large extent governed by currency adjustments. The great trading nations have adjusted their currencies to permit of higher values, the intention generally being to restore these to their 1925-28 base. The “getting there” will take some time, but that is the way we are headed!