WOOL CABLE

Evening Star, Issue 17484, 15 October 1920, Page 2

WOOL CABLE

PRODUCTION EXCEEDS CONSTJMP- - ' TION.

HIGH COMMISSIONER ADVISES

GROWERS TO HOLD.

Following is the text of a cablegram on the subject of the wool market in Great Britain, received from the High Commissioner and read by the Prime Minister in the House yesterday afternoon : With reference to your telegram of August 20, Messrs W. D. Hunt and Wilson have met the Director of Raw Materials, a committee of London wool brokers, the London and colonial wool importers, Australian wool growers, and othera interested in th« trade, and have now reported. Report will be sent by mail. Following are the principal points : Firstly.—The stocks of Imperial Government and Australian wool in the United Kingdom and elsewhere, afloat, and in Australia, on June 30, amounted to 2,049077 bales; ditto New Zealand. 856,377 bales—roughly one and a-lialf years' production. Allowing for the stocks which -will be held in a normal year, the stocks of Australasian wools on June 30 were approximately 1,650,000 bales in excess. Stocks of South American at the same time were estimated at 200,000 bales above normal; South Africa,, 100,000 bales —making a total roughly of 2,000,000 bales in excess. Whence it seems that the world's wool production has gained on the world's consumption since the outbreak of war by about five growth. Secondly.—Since November, 1918, about 17 months' growth of Australasian wool has been disposed of in 19£ months, and it is evident the world's consumption has not equalled production since the armistice.

Thirdly.—War conditions forced prices to extreme figures, and enforced economy of manufactured goods amongst the civil population. The purchasing power of the •wool-consuming population of Europe was enormously reduced, and to supply the impoverished nations with wool extended credit for home consumption is difficult and risky, and a return to normal conditions can only be gradual. Fourthly.—A reduction of the cm-rent Australian olip, estimated at 400,000 bales, through the drought, will assist the general position; but the most that can be hoped for in the immediate future is that consumption will overtake production. Fifthly.—A surplus of 2,000,000 bales, therefore, must be held for a considerable time, and can only go into consumption gradually. The problem, therefore, "is to ensure its being held iu such a way as to minimise as far as possible its detrimental effect on the market. The problem is made more difficult from the New Zealand standpoint by fashion, the demand being strongly in favor of fine wools. Fifty-five per cent, of New Zealand-stocks are of a class.now selling badly, as compared with 6 per cent, of Australian. Thirty-four per cent, of New Zealand are fair-soiling lines, against 15 per cent, of Australian, and 11 per cent, are the bestselling lines, as compared with, 79 por cent. Sixthly.—Low cross-bred wools are comparatively cheaper to-day than the majority of other raw products, and sooner or later must return to normal. It should be one of the safest things to hold for all practical purposes. Wool can be regarded as an imperishable commodity. The Australian Committee are endeavoring to assist the position by spreading wools of the current Australian clip over a period of 12 months, by limiting the amounts offered at Australian and London auctions. They anticipate that if the banks, brokers, anil growers work together the financial part of the hold-over can ibe carried out without Government help, provided the Director of Raw Materials co-operates in feeding the market. jrraduaUv with Imperial Government stocks. The New Zealand Committee consider that similar control in the case of the Dominion can be carried out only by the Government, which, of course, they do not recommend, because, firstly, while Australia is the dominant factor in fine wool production, New Zealand is in cross-bred, and if the Dominion attempted to withhold its clip the result ■would be to give the market- to other crossbred producing countries; secondly, the cross-bred clip is already spread over 12 months, as approximately half the total produced In each hemisphere, hence the committee consider that any attempt at interference would result in more harm than good. Seventhly.—As the whole of the world's wool cannot go into consumption in the immediate future at any price, somebody must hold a, portion. The dominant factor at present is that the Imperial Government, as holder of the world's accumulated surplus department, have shown no desiro to unduly force their wools on the market. and the committeo suggesfr that the Government of New Zealand should request the Imperial Government, urgently by telegram, to give an undertaking not to unduly force their wool on the market, but to hold stocks firmly, and only place them- on the market in such quantities as will be_ absorbed -without seriously depressing prices. This would steady "the position and restore confidence throughout the whole industry, and, apart from the sentimental reason, would benefit the Imperial Government, as a serious decline m cross-bred values would hit the JBritiah Treasurv.

Eighthly.—The committee think it is dear from the above, that cross-bred wool has a future, and that if those growers financially able to do go hold their clips untd the consumption and the change in fashion mako more impression on the stocks this will assist the whole position" bomeone must hold the wool, and it is better for the financially strong growers to do so than for the speculators to step in. The committee consider the New Zealand Government should make the whole position known to growers, and they urge those who can do so to .hold back their wools as long as possible. Ninthly.—New Zealand growers could also assist to make the" market profitable to themselves by increasing their ewe flocks wherever tho country is suit-able thus providing for increase of meat, particularly lamb, the outlook for which the committee consider is verv good Tenthly.—No difficulty "is anticipated in obtaining tonnage to move the New Zealand clip, but in addition to cheaper storage there are advantages in holding the wool in New Zealand, where it is not such a menace to the immediate future of the market as it would be if stored in London. -Further, the capacity of London to receive and store the wool is limited at the present moment, and before sending wool to London for sale growers should ascertain that it can be accommodated. Jf desirous o-f holding, the growers should hold in Norw Zealand, only sending to London if they mean to meet the market and take what they can get for it within a reasonable time of its arrival. . My officers have been present at meetings and generally concur in the recommendations contained in the report.

(K>VE.RNME2fT AID PROMISED. Ifc was suggested by tile Leader of the Uppositioii, when the Prime Minister had read the cable, that there might be some neea for Government aid in financing. 1 have practically made arrangements to meet the difficulty/' replied Mr Massoy. Ut course our finance is limited, and It is not possible perhaps, to go the whole length; but if there is anything w* can do to help the position nothing will be iett undone.