WHY THE PRICE-FALL?

Evening Post, Volume XCII, Issue 108, 3 November 1926, Page 21

WHY THE PRICE-FALL?

VARIOUS VIEWS

BUTTER "HOLDING" IN LONDON

PROPAGANDA AND DISPARITY OP

PRICES.

' To what extent arc the low prices of New Zealand butter in London due:— (1) To over-storage, (2) to anti-board sentiment, (3) to strike depression, and (4) to the world-wide tendency towards lower price levels T Mr. J. B. MacEwan, bead of the wellknown Wellington firm bearing his name, contends that the' greater fall in New Zealand butter, as compared with Other butters, is due to, cause No. -2. Summing up the position, Mr. MacEwan is reported as saying that "he could not escape the conclusion that the development of absolute control, and particularly the issue of most unhappy j directions and even commands from the Dairy, Board's London office, had produced a feeling of strong resentment among the distributors at Home. . . It appeared to be undisputed that the London distributors were looking with strong disfavour upon New Zealand dairy produce, and giving' preference to produce from other countries. If this attitude were maintained for any length of time it would mean not only an immediate heavy loss to. the producers Of the Dominion, but also a very grave menace to their footing in the London market.'' Mr. MacEwan expects an increased output—perhaps by 10 or 15 per cent—of New Zealand dairy produee^this season, but doubts whether the increase in volume will offset the fall in value due to the lower prices. "PIMINESS" OP HOLDERS.! As regards the. New Zealand dairy companies who hold London butter stocks, the London report of Messrs. Dalgety and Co., Ltd., Btates: "The policy of many holders is to seek even higher prices before releasing their stocks. They arc no doubt influenced by the considerable advances in the market for butter during the autumn in recent years, when circumstances were entirely different. * The firmness of holders is a feature of strength at tho moment (this was written on 22nd September) but may well develop into a factor of weakness when plentiful supplies of new seifeon's butter from Australasia are nearer at hand. In the meantime buyers who appreciate the situation are naturally inclined to be cautious." -In Hne with what was evidently in the mind of the writer of the above paragraph, the factor of weakness did develop after he closed his report, and New Zealand butter fell to 140e and lower. \ But, with butter still under 150s, it is cabled that 350,000 boxes>t New Zealand remain in store m The London manager .of the New Zealand Dairy Producers' Board, Mr. J. B. Wright, in a report bearing the earlier date of 9th September, appears to take a different view:—"The quantity in cold store, although appearing heavy, does not indicate the exact position, as for some months past the trade has not been buying, except for immediate requirement*. In previous seasons, the quantities of New Zealand butter available during July, August, 1 and September have been quickly absorbed by the trade, in anticipation of short supplies in October and November, but this year, with the stocks fully disclosed, there has been lio disposition on the part of the buyers to endeavour to stock, up §>t that period. The price of. New Zealand butter has fluctuated between, very narrow margins throughout this year, and this has not given the big buyers any opportunity of stocking up to any extent. With the approach bf tho new season, the big buyers, who usually initiate all buying movements; have been using the cheap. Continental and Irish butters which have been on this market during the summer, and allowing a further accumulation of New ZealaSd, no doubt with the object of tiring the holders, and causing the prices to fall, thus enabling them to get in at a low figure, in order to carry them forward until the next season's butter arrives in substantial quantities. In my opinion, the question of finance has been quite an important factor in the recent ■■ drop as, in the month of July, there was a fair quantity of butter bought by speculators in anticipation: of.a rise in August, September, and October. These quantities have to a large extent been liquidated,, and the is in a healthy Condition, - notwithstanding the apparent} heavy stocks." At the time that the above was written New Zealand butter bad not gone below 1565. ALLEGED POISON CAMPAIGN. Here is another viewpoint of the apparent discrimination in London against New Zealand butter. This paragraph is taken from the official repprt of the last.meetirg of the New Zealand Dairy Producers' Board: —"The Shannon Dairy Company wrote regarding the market position, stating that they wire told that heavy stocks were being held, but the industry did not appear to be able to/secure exact knowledge of the quantity. They were of the opinion that the strike was not the only controlling element of prices. There waa almost a feeling in dairying circles that the Engliib people's minds were being poisoned against New Zealand butter, and some definite action should be tak'en to combat this. The position of tha market and the disparity between Danish and New Zealand prices almost suggested speculative inftnenee, which might warrant appeal to. the Imperial Government by the New Zealand Government —members of the board agreed with'the disability suffered by producers owing "to accurate facts of stored ptocks not being available. The board's requirement of the return of daily sales and stocks, would, in the current season, BUpply the knowledge that was not now available regarding stocks. Steps were being taken by inauguration of advertising, to protect producers' interests in periods of heavy supply such as the present."