WHEAT

Evening Post, Volume c, Issue 54, 5 March 1934, Page 11

WHEAT

AUSTRALIA'S PROBLEM

WAITING FOR RISE

POSITION ANALYSED

(From "The Post's" Representative.) SYDNEY, February 23. With all storage facilities taxed to the utmost, Australia's wheat trade is practically at a standstill. Within the last twelve months the market for wheat has contracted, and world prices are almost stationary at a very low level. Everything points to the fact that there is a concerted refusal on the part of wheat farmers to selj at the present prices, and few will blame them. The writer discussed the position the other day with a prominent grower from the famous Biverina wheat belt, and he was not in tho least perturbed. He made it quite clear that he would not sell on the present market, and. was content to wait until the outlook .improved. He was certain that improvement would come about without any Government interference. He pointed to the wool position. Two years ago the outlook for wool was causing grave anxiety. There • were conferences all over the world, but nothing was done. The Government in Australia at the behegt of the growers, did not interfere. All price-fixing schemes were rejected by the growers themselves. And then, in spite of this inactivity, the price of wool came back—back further than tho most sanguine anticipated. Was it not possible for the same thing to happen to wheat? Certainly there was no immediate prospect of such a happy change of fortune for Australia, but did anyone imagine that wool values would rise when, and as high, as they did? The recovery of wool prices has made a tremendous difference to Australia. There has been a return to buoyancy in business that has been most gratifying. Wool has done won-' dors in showing the way to recovery, and.were wheat to recover to the same extent Australia would once again sail along the ( sea of true prosperity. It is unfortunate, therefore, that authoritative opinion inclines to a view that tho general depression in prices must continue. The wheat expert of the Customs Department has given three main reasons for this. He pointed out in the first place that a steady expansion of production in tho principal exporting countries, and Government assistance to growers to. enable them to remain on their properties had contributed towards lower price levels. European tariff policy had encouraged home production, and had brought about a contraction in the market for exports from, the great wheat-producing countries. Germany provided an excellent illustration of the consequences of such a policy. In 1928-29, Germany, with an import duty of 2s 6d- per cwt imported 78,000,000 bushels and produced 123,000,000. Three seasons later, when the duty had been quintupled to 12s 6d, production rose to 184,000,000 bushels and imports fell to 23,000,000. Tho third main reason for the 'depression in prices was consequent upon the two already mentioned; it was the accumulation of huge stocks in North America. Although the figures for Australian wheat production during the 1932-33 seasoiv are not yet final, it ia estimated that it will reach 213,000,000 bushels. This compares with, the 1931-32 production in Australia of 190,612,188 bushels. In spite of last season's increased production, the exports fell from the level of the previous year. The value, too, showed a fall, the figures in each case reflecting the operation of the three stated factors. The chief markets for Australian wheat during the 1931-32 and 1932-33 seasons were the United Kingdom, China, Japan, and the Irish Free State, in that order. Last year the United Kingdom market for Australian wheat improved by about 3 per cent., and tho China market by nearly 9 ■ per cent. I'l the other countries listed the imports of Australian wheat fell off—in the case of Japan by about 16 per cent. From December 1 to February 7 Australian exports' of wheat and flour equivalent amounted to only 20,981,136 bushels, "much less than half the normal exports. Some of this wheat was last season's carry over. The Tefusal of many of the farmers to sell their wheat at current prices has alarmed some of those who have overspas millers' orders to fill, but they are unable to rectify the- position." Rightly or wrongly the view is held in most quarters that wheat cannot go lower than the present price of 2s 6d a bushel, delivered in London. On the other hand, prices might rise. There is still hope that tho pressure of Argentine wheat on the world market might ease. The position, it is said, is not without hope. It is a dark hour for growers, but the darkest hour is before the dawn.