THE VALUE OF WOOL

Evening Post, Volume CXXV, Issue 9, 12 January 1938, Page 12

THE VALUE OF WOOL

TURN OF THE TIDE

FUTURE OF MARKET

THE JAPANESE FACTOR

: (From '"The Post's' Representative.) LONDON, December 22. ' The view that, although increased purchases of wool are likely in the New Year and higher prices are probable with returning confidence m Great Britain, prices will not return to last year's level, is held by Mr. F S Arthur, New Zealand representative on the International Wool Secretariat: In a review of the season to date, he stressed the need for wider markets for wool. ' Referring to the Auckland sale on November 27, the first of the Dominion sales for 1937-38, Mr. Arthur expressed the opinion that "the position might have been much worse." Only those who had closely followed the market in the last few months know how fortunate growers had been in escaping the lowest depths of the depression through which the trade had passed with progressive seventy since The end of November saw the turn of the tide and the restoration of ■the. trade to a measure of confidence sum-1 cient to initiate a buying movement which spread through all sections ot the industry," said Mr. Arthur "and this was reflected in substantial advances in all primary markets. A. consideration of the factors which led to the serious recessions in wool prices throws some light on the possible future course of the market. PRICES AT HIGH LEVEL. "The close of last season saw the barometer 'set fair' with prices at their highest point and a complete clearance of clips in every producing country. Under the influence of a mild trade boom prices of all commodities rocketed to pre-depression levels and a period of prosperity was confidently predicted. "It is now fairly generally acknowledged that speculation waß largely responsible for the extreme level to which prices were pushed in the excitement of re-armament, but the wool market was comparatively free from such influences and the demand was a real consumer demand." JAPAN TAKES LESS. Mr. Arthur gave figures to show the remarkable achievement of Japan in i buying last season only 12,400,0001b of wool less than in the previous season, in spite of remaining out of the Commonwealth market until the New Year. He sets out the purchases in various countries, including the following:— Country of 1935-36. 1936-37. origin. lb. lb. Australia .... 235,800,000 84,500,000 New Zealand .. 23,200,000 39,500,000 Substantially increased purchases were made in South Africa and South America last, year over those of the year before. "Japanese competition was a most important feature of last wool seasou in ,New Zealand," Mr. Arthur continued, "and to a large extent was responsible for the phenomenal advance in prices of crossbreds in the early sales. At the time of writing there has been no' serious buying by Japan in any country," nor has there been any considerable quantity of wool bought by Japan in Australia and New Zealand since the end of the calendar year. AMERICAN DEMAND. Dealing with the United States as a ■wool buyer, Mr. Arthur points to the significance of a remarkable increase of 98,000,0001b in United States purchases, equivalent -to 300,000 bales. United States buying embraced fine wools and crossbreds, and New Zealand benefited very considerably from this competition. "It is only in periods of reduced home production through adverse climatic conditions or in periodic flushes of prosperity that America finds it necessary to import substantial quantities of Dominions wool. Last year was one of great prosperity, and consumption of textiles, helped by the very efficiently run Associated Wool Industries publicity scheme, showed a remarkable increase." Since then stocks, indices of activity, production, and employment had suddenly declined to almost- depression levels. With Germany and Italy still operating with restricted foreign currencies and developing their staple fibre industries with relentless progression, tho only important outlets Mr. Arthur sees for this additional wool--are Great Britain, Belgium, and France. CONFIDENCE NECESSARY. Confidence had been shaken in Britain through the slump 'in the United States, the fall in raw commodity prices, and a recent .increase of 109,000 in unemployment. The recent announcement that there was sufficient re-armament work in hand to prevent any serious decline in employment, together with the excellent showing of many important industrial concerns, would, however, probably result in fairly complete restoration of confidence before long. There was already evidence of increased Yorkshire buying of \*tool. France might increase her purchases with the settlement of labour troubles, and the recent modification of the 40-hour week and Belgium's purchases were again expected to be substantial. WIDENING THE MARKET. It appeared unlikely, however, that prices could be restored to the profitable levels of last year. The change in the situation should bring home to politicians and growers alike in the Dominions, and to industrialists also, the urgent necessity for a widening in the demand for wool and the breaking down of some of those barriers which were effectually stifling the woollen textile industry in potentially important consuming countries. New Zealand had acted wisely in negotiating a trade agreement with Germany, and this principle should be extended wherever possible. Only in this way could any effectual check be put on the development to even more dangerous proportions of the staple fibre industry on the Continent. High hopes were held that the accomplishment of an Anglo-American trade agreement would be the first step in a general movement towards free international trade and eventually a wider demand for wool.