THE WOOL SEASON.

Evening Star, Issue 13092, 27 October 1908, Page 6

THE WOOL SEASON.

A LOOK.AHEAD. THE GROWERS' OUTLOOK. A BASES OF 5d LB FORESHADOWED. The" wool season is on us again, heralded, as it not seldom the case, by talk of a dispute between, shearer and squatter or farmer. The wool-grower has enough to think about just now in connection, wth the I aspect of the market, which for him has al-1 tered very much for tile worse 6inco last season, without having to worry over labor troubles. A few inquiries made yesterday in > regard to.market prospects make it certain that station owners and farmers will have to he content with prices very, very much below what they have obtained during the" past few years. In round figures the New Zealand clip is estimated to fetch something;like £2,000,000 less this season than_ it did 'last, which is a very severe pruning of the Dominion's annual income. It is, of course,' superfluous to say that the wool market in the colonies depends entirely on the state of the wool and textile industry at Home. The condition of this trade is toade only too clear in the following extracts from the letter of a West Riding (Yorkshire) correspondent of the \ London ' Economist,' published early in' September:—"Throughout consuming wool areas much interest already centres in the coming Australian season, the usual contingent of buyers having in many cases already left. It is noteworthy that a few buyers for one or two big Bradford importers have not yet gone, there principals evidently thinking that it will be time enough to start buying when the first rush to secure wool is over. There may he wisdom in this, for as far as one can see buyers will take more time over their work during the coming season than they did last. An impression generally prevails among importers that the opening in Australia will be higher than actual manufacturing conditions warrant, but that after the Continent and America have got their urgent orders filed, then things will gradually ease. ... A far different spirit animates the contingent of Australian wool-buyers tluin a year ago. The reception that some have had will long live in their memory, for they have been made to feel the heavy losses which their colonial purchases last season made. If all 1 the facts could be published,- it would make a black page in the history of the trade. The wonder is that we have not seen more calamitous times. The banks have kept up many a firm that would otherwise have had to go to the wall, and not a few are to-day at the complete mercy of these financial houses. Plenty of firms are unable to command the credit that they had last season, and they will have to go considerably slower this year. Another mistake like the last would be very serious for even big, wealthy firms; hence the anxiety to buy wool on a ' safe " basis. If spanners and manufacturers were booked months ahead and orders plentiful, then to-day's rates would look like being maintained, but with trade so indifferent, and trouble brewing in the Lancashire cotton trade, the outlook is certainly gloomy. There is to-day a complete absence of all incentive to buy freely of either wool, tops, or yams. I don't know of half a dozen firms of spinners in Bradford who have all their machinery going arod working full time, while I ain certain that more than 50 per cent.of Bradford's looms are standing. Importers have gone out to Australia with worse manufacturing conditions facing them than have obtained since the autumn of 1900." This depressing view was confirmed in every detail by. a member of a. prominent firm of buying brokers who has recently returned to Dunedin after a business trip to the Old Country. He remarked that it was exactly what he had seen at Home, and from letters received since his return here he saw no prospect of improvement. He pointed out that only last week it was cabled out that the British trade returns showed a decline of £70,000,000 on the figures for the previous year, and said that this fact had a grave influence on the wool trade. This trade depression in Britain, together with the great amount of unemployment had greatly curtailed the spending powers of the millions, and the wcol trade suffered accordingly. As he put it, "they simply can't spend .the money on textile goods. Trade on the Continent is just as bad," he added. They are operating there very carefully, indeed. As to America, only a very small proportion of the New Zealand clip ever goes there, and the American buying support to the market is very spasmodic—too spasmodic to help to improve matters. The American buyeis are either on or right off. Eesidei', America is ttill carrying big stocks of wool."

Our informant went on to say that the American financial panic started* the whole trouble. When wool bought abroad began to arrive in America, the "paper" had to be met, and the banks naturally wanted Io know when their customers' overdrafts were going to bs wiped out. They demanded payment, and this led to a number of forced sales. This affected the market there and at Home, and any nunibar of "top" makers had to quit "at bslow cost. As showing the way the Home market had tumbled "down, he mentioned that a well and favorably known North Island clip of 6ome 450 bale?, which averaged 154 d per lb'at the London May sales of 1907, only realised ll|d per lb at the London January sales, " and since January," he added, " we have had further declines—a steady fall with each successive sale. The July sales would, in fact, have been very much worse than they were but for the fact of a speculating (syndicate being formed, with a capital of' £1,000,000, to give buying support to the market and prevent further sagging of values. They did so, but it is only staving off the inevitable. Sooner or later they will have to reoffer their purchases on the London market, and, besides this, there is any amount of wool stored in the London docks that must go into consumption before long. The market is (steadier now, but no firmer." In view of the above statements of the case our informant certainly seems to have good reasons for the opinion he expressed that this coming 6eastm will see prices very much down, and'with no prospect of improvement witlun the next two or three years "Th© last two or three years,*' ho said, " prices have been abnormal, and farmers and growers have been spoilt by these last few seasons. We have probably come now to a normal state of affairs. Prices are bad now, but not so bad :« they were not so very long ago. It is only eight years since prices centred round a basis of 4d per lb, whereas now. the market for the coming season points to 5d per lb as the probable "round which prices will be fixed. It looks like being very many years before we again reach the prices which buyers had to pay during the past two or three years. The loss to the New Zealand grower will l>e considerable, but there is more mixod farming now than there used to be, ;uid favorable markets for frozen meat and dairy produce will help in some degree to compensate -the farmer for his reduced returns from wool. The grower should remember, too, that he is not the heaviest loser by the drop in the wool market. The people who have suffered mest are the English people—the epinnere and topmakere. Every English importer of colonial wool has lost heavily on his purchase. One thing I have noticed is that in New Zealand the price of land and ftock has not fallen in sympathy with the wool market, which shows that the farmer has not all his eggs in one basket. In conclusion, I should think that the grower's best course would be to take the first price offering for his wool. It often turns out the best he will get." One of the leading selling brokers in Dunedin took very much the same view of the situation. "A great deal of woo!—and not inferior wool either, but good standard quality fleece will realisa between per lb and 6d per lb this coming season," he said. "Farmers will have to be prepared to accept the 63 reduced values.

They hare read from time to time cable* announcing a fall of 5 .per .cent, at ihe London wool sales, but possibly they hav« overlooked the fact that this W happened with each successive series Sometimes the decline has been neater 10 pert cent., and the aggregate.of these ,faUa' Amounts to a 6erious decline since tbfe! January sales in Lbwlon. There should be some considerable interest taken in the trend of the market at tlie next tcries of sales in London, which begin on November 24. That will ba before our opening sale in Dunedin, but not before the firet sale of the season in New Zealand, which takes place in Wellington on November 13, and is followed by a sale in Chxistchurch on November 19. Our first sale in Dunedia takes place on December 17 this year, which will be rather early for the "bulk of growers. The date of the second or big cale of the season has been fixed for January 25, which is rather later than usual. There will probably be rather inconveniently largo offerings at that sale, owing to its being later than usual and the first sale earlier than usual." Asked whether he thought the Homo trade would be as well represented as usual by buyers, our informant replied:— •' I think there will be any number of ' buyers to take all the wool offering, provided they can get it at a fair price." As to the American demand or possible lack of it, he did not think that much of a factor on the New Zealand market, and quoted the following table showing the destination of wool sold at auction in New; Zealand last year:— • ' , T . ~ Bales. lorkshire ... . 52,000 Continent ... 4,500 America 250 Local mills ... 16,500 Speculators and fellmongem 33,194 Total 106,444 In reference to the above he pointed out the very considerable proportion of New Zealand wool secured at auction for the local woollen mills, and remarked tliat it would come as a relief to them to secure their raw material at a big reduction on the" prices they liave had to pay in the past few years. As to the amount of the clip itself, our informant said that it should equal if not exceed that of last season. There had been heavy winter 10.-ses in some districts, especially in the high country of Canterbury and Otago, but these could not bo ascertained accurately until shearing time. As against that the sheep returns for the Dominion showed an increase of 1,500,000 sheep on the figures of the previous year. He mentioned, however, that it would be as well to remember that the last, return was the first made since the abolition of the sheep tax, and there was a possibility that owners had not previously given quite correct returns in view of the tax. The lambing was turning out very well so far as was known. It was over in the low country, and the increase there should be considerable. Lambing was just about on now in the high country, and though there had been losses, yet these had not been so bad in some places, as, for instance, in the country back of Oamaru, as had been anticipated. He added, in conclusion, that though the woolgrower would suffer from an adverse market this season, tlie dairy farmer would help to make up the deficiency, as he was enjoying record prices for butter, and especially for cheese, which had reached as high as 6d a pound. It may be mentioned, in conclusion, that according to Dalgety and Co.'s annual review the total production of wool in New Zealand last season was 436,941 bales (of which 134,349 bales were sold in the Do-, minion and the balance shipped for sale in London), and taking an average price of about £l3 per bale the return to the growers works out at something like £5,700,000, lesE charges. A reduction of £2,000.000 on these figures this season would be a serious matter. Last year, it may also be mentioned, the percentage of bales sold in the Dominion was only as against 42 per cent, in 1906-07, and 47 per cent, in 1905-06. Those growers who List season shipped their wool Home for sile in preference to selling in New Zealand possibly did so.to their subsequent regret.