WOOL PRICES DROP.

Evening Star, Issue 22879, 10 February 1938, Page 10

WOOL PRICES DROP.

Otaoo , pastoralists had a disappointing experience yesterday at Dunedin’s second wool sale of the season. There was a decided drop in values, and as a result many of the growers declined to part with their offerings. At the first auction in Auckland on November 30 a marked recession in values was reported, but at some of the subsequent fixtures substantial recovery occurred, particularly in. Dunedin on, December 21, encouraging the hope that the improvement would continue. The Sydney market has shown some liveliness lately, and that was regarded as a good indication of an increasing demand for the raw material. At the same time it was significantly reported that the sales of wool in Sydney from July 1 to January 51 totalled 613,155 bales, which realised £10.781,710. Compared with the auctions for flic corresponding period of last year, these figures show a decrease of 192,248 bales and £5,571,687. The whole position is wrapped up in the word uncertainty.. It has been said re-

peatedly that the mills everywhere arc running on low stocks, yet the industrialists who operate them are unwilling to ipurchase according to their normal practice because of the obscurity in the international political and economic outlook. Japan, it will be noted, was practically out of the market yesterday, for the reason that her Government, immersed in the costly war with China, has taken control of the currency, and has greatly reduced the operations of the wool purchasers. The same thing applies to some extent to Germany and Italy, with the result that substitutes manufactured in those two countries are being increasingly used.

At the same time, with Yorkshire mill owners buying from hand to mouth, the Continent lately has been the chief customer of the wool-producing countries. America has been a disappointment. Nervousness over President Roosevelt’s legislative experiments is stated to be the chief cause of the economic recession there, and the wool textile trade is one of the industries most severely affected. Though yesterday’s sale in Dunedin, as a consequence of a variety of adverse influences, produced results below hopes and expectations, there is no occasion for discouragement, for present values, though so much under those of last year, are sufficient to yield profit to the grower. It is the uncertainty of the outlook that causes the most anxiety. A steady and sustained improvement in wool prices appears to depend upon an extension of Japan’s purchases, and a turn for the better in textile and general industrial activity in the United States.

As a • result of the threat from the use of substitutes and other causes, attention is being directed in Australia to the question of reducing the costs of wool production. Some economics were effected by the growers themselves, the average saving being estimated at not less than a penny a pound, but these have since been loi>t through increases in wages and in the cost of essential materials. . A writer in the ‘ Australasian ’ says that a stage has arrived when the utmost vigilance is necessary to protect the wool-growing industry from a serious setback. In Ijis opinion wool will win in the end against all' rivals, but at the moment the substitutes are serving a purpose in countries that are under stress, and wool is suffering in consequence. The argument is advanced that the surest and most effective way of meeting a low range in wool prices is by reducing the costs of production. It is pointed out that the Federal Government could assist by wiping out the Federal land tax, and that the Commonwealth and other Governments could help in various other ways. The writer contends that Australia cannot afford to allow wool production to become unprofitable. The same remark may be applied to New Zealand. Lower wool prices than those prevailing last year would be effective against the threat of substitutes, hut if pastoralists are to continue in profitable occupation of their holdings care will have to be taken to see that the costs of production are kept within reasonable limits. New Zealand’s Labour Government would be wise to direct its attention to this point.