THE BUTTER MARKET.

Kaikoura Star, Volume XLIV, Issue 39, 13 May 1924, Page 3

THE BUTTER MARKET.

The recent fluctuations in the prices of butter and cheese, and the presen,! state of the market, has given rise to a good deal of discussion on the subject, (says the Auckland Observer!. Towards the end of February the price of New Zealand butter was about 188/. It then began to descend somewhat rapidly, and fell to 150/ to 152/, when importers made an effort to steady the market. What really happened was that the factories that had shipped on consignment instructed their agents to hold oil the market. This created an artificial shortage, and the price was gradually forced up to 172/, at which it stands' at the moment, but the market is very quiet. Besides the effect of withholding supplies, the market was stimulated by the comparatively heavy purchases made by Germany of Danish butter. This forced up the price of the Danish product, and this was reflected in the London market. The good effect of Germany’s purchases can be temporary only, for Germany cannot go on buying high priced butter. The moment Germany ceases buying Danish butter the Danes will drop their prices, and the fall will be reflected in London. The fact that the market is very quiet is the first sign of a fall in values. Should the market take an adverse turn their curiosity will be aroused as to the measure of the drop. Butter fell from 188/ to 152/, and has since risen to 172/ to 174/, that is to say, the full extent of the drop has not been recovered, and, judging by the swing of the pendulum the next fall will carry prices below 152/ before the downward tendency can be arrested. There are many reasons for thinking that a fall is probable. European supplies are now coming forward, and the output of Europe will show an increase, for this season Russian supplies which are expected to amount to a very substantial quantity, w’ill be on the London market. The movements in the butter market are in accordance with economic principles. There is a distinct tendency for values of commodities to recede. Professor Condliffe, of Canterbury University College, Professor of Economics, has repeatedly stated that we have entered upon a period of falling prices. The fall will be neither sudden nor precipitate, for varied interests will endeavour to hold up the markets. The fall, therefore,' will be gradual, which is just as well, for it will give producers ample opportunity to adjust the costs of production to meet the altered conditions. At the corresponding date in 1914 New Zealand salted butter was quoted at 106/ to 108/ ,and unsalted 116/ to 118/. There is no reason to suppose that there would have been any great variation on the foregoing figures in May, 1915, and subsequent years, were it not for the war. This wholly unexpected event gave the pendulum of prices a violent jerk, eending it swinging upwards. Now the pendulum has to swing back, hut its movement backwards will be retarded as much as possible by the efforts of combinations of individuals and combinations of circumstances, but the pendulum ultimately swung back, perhaps not quite to the pre-war point of the numerous checks, but certainly to a point not far removed from the pre-war mark . That is to say butter may not fall to 106/- to 10S/per cwt. but it will go very near to that. This movement will take a period of time, and producers should keep a careful watch of the pendulum of price, and endeavour to reduce their production costs.