The Evening Star MONDAY, NOVEMBER 29, 1937. LOWER WOOL PRICES.

Evening Star, Issue 22818, 29 November 1937, Page 10

The Evening Star MONDAY, NOVEMBER 29, 1937. LOWER WOOL PRICES.

At first sight the prices received at the wool sale at Auckland ou Saturday seem alarming, but there is no need for undue concern, A drop of approximately 40 per cent, at the opening auction ot the New Zealand season is certainly disappointing. Growers, observing the trend of the market in London and Australia, were prepared for a recession in values, though not to the extent indicated. Wool was at the peak at this time last year, and it could hardly be expected to remain at such high values. So far as can be judged, the statistical position in the consuming countries is sound. That tho producers believe this to be the case is shown by the fact that at Saturday’s sale the reserves were not reached in a majority of the offerings, the amount sold being only from 30 to 36 per cent, of the total. Evidently growers who can afford to do so prefer to wait in the conviction that there will be an improvement at subsequent auctions. It will-be noted that Japan was not bidding on Saturday and that the Bradford representatives were also inactive, the chief competitors being French and Belgian buyers. The series just concluded in London closed with a decline in prices, but it is clear that there is considerable underlying strength in the market. Japanese operations greatly affect the position. As a result of the dispute with Australia, Japan last year took from New Zealand about 100,000 bales. Amicable relations having been restored with the Commonwealth, it was anticipated that the Japanese purchases yi the Dominion would be about 50,000 bales in the season that has just begun. ; It has been stated that the Japanese mills are greatly in need of further stocks. The position, however, is obscure from the fact that the Japanese Government, in the present emergency, has taken entire control of the finance and this may considerably restrict the purchases of raw wool.' If normal circumstances prevailed there is no doubt that Japanese industrialists would be operating strongly in the market, but in the present circumstances the future is uncertain. The United States was expected to come strongly ' into the market this season, but two factors are operating against increased activity. One is the disturbed position in Wall Street at the moment and the other is to ■ be found in tho fact that American wool producers have experienced a good season. From reports that come to hand from time to time it seems clear that the mills in most countries need the raw material. In many cases restricted purchases are due to difficulties in arranging the finance. ; Senator Guthrie, who is intimately connected with the Australian wool trade, .on his 'return to the Commonwealth: recently from a trip abroad, said ho was deeply impressed by the threat of substitutes produced on the Continent to the wool-producing countries of the world. Other authorities, ou the contrary, say that on the existing basis wool is not dear enough for .staple fibre to cut severely into its use owing to the cost of manufacture. That is an advantage. For two years wool has consistently sold at rates on payable levels for producers, and has found ready consumption. There is no apparent reason to fear the / immediate future. No abatement of the prosperity in Great Britain is suggested, and the adverse factors that are operating in the wool market just now, it is to be hoped, are meeting. New Zealand fortunately, has no carry-over this season. Looking at the position from every angle, there is no reason for pessimism. It cannot be expected that last year’s prices will berealised, but there is ground for bope'that the returns from the wool auctions in the Dominion for the season will give a satisfactory profit to the producer.