WOOL POSITION.

Marlborough Express, Volume LIV, Issue 245, 15 October 1920, Page 5

WOOL POSITION.

HIGH COMMISSIONER'S CABLEGRAM.

HOLD-OVER SUGGESTED,

[Press Association."

WELLINGTON. Oct. 14 Following is the text of the cablegram on the subject of the wool market in Britain that was received from the High Commissioner and read by the Prime Minister in tho House this afternoon:—

"With reference to your telegram of August 20th, Messrs Hunt and Wilson have met the Director of Materials, the committee of the London wool brokers, London a.nd Colonial wool importers, Australian wool-growers, and others interested in the trade, and have now reported. The 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 30th, amounted to 2,049,177 bales, and New Zealand wool 856,377 bales —roughly, one and a half year's production. Allowing for stocks which would be held in a normal year, tho stocks of Australasian wools on June 30th were approximately 1,650,000 bales in excess. The stocks of South America at the same time are estimated at 200,000 bales above normal, and South Africa 100,000 bales, making a total roughly^ of 2,000,000 bales in excess; hence it seems that world's wool production has gained on the world's consumption since the outbreak of war by about five months' growth. "Secondly, since November,- 1918, about 17 months' growth of Australasian wool has been disposed of in 19£ months, and it is evident that tho world's consumption has not equalled the production since the armistice.

"Thirdly, war conditions forced prices to extreme- figures and enforced economy in the use of manufactured goods amongst the civilian population. The purchasing power of tho wool-consuming population of Europe has been enormously reduced, and to supply the impoverished nations with wool [A sheet of telegram is here missing] extended credit for home consumption is difficult and risky, and •. a return to normal conditions can only bo gradual.

"'Fourthly, tho reduction of the current Australian clip, estimated at 400,000 bales through the drought will assist the general positon, but the most that can be hoped for in the immediate future is that consumption will overtake production. "Fifthly, the. 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 ita being held in such a way as to minimise; as far as possible its detrimental effect on the market. Tho problem is made more difficult from tho New Zealand standpoint by fashion and demand being strongly in favor of fine wools. Fifty-five per cent, of New Zealand stocks are of the class now selling badly, as compared with G per cent. Australian ; and 3-1 per cent, of New Zealand are fair selling lines, against 15 per cent. Australian, and 11 per cent, are best selling lines, as compared with 79 per cent. '•'Sixthly, low crossbred wools aro eompartively 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- Tae Avis-tralian.. .Oommit^e ,is endeavoring to assist the position by spreading the wools of the current Australian clip over a period of twelve montlift by limiting the amounts offered at Australian and London auctions. It anticipates that if the banks, brokers, and "growers'* work together that the financial part of the hold-over can be carried out without Government help, provided that tho Director of Raw Materials operates in feeding the market gradually with Imperial Government stocks. The New Zealand Committee considers that similar control in the ease' of the Dominion can be carried out only by the Government, which course it does not recommend, because (firstly) while Australia is a dominant factor in fine wool production, New Zealand is so.in crossbreds, and if the Dominion attempts to withhold its clip the result would be to give the market to other cross-bred-producing countries; (secondly1) the crossbred clip is already spread over twelve- months, as approximately half the total production in each 'sphere, hence the committee considers 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 the Imperial Government, as holder of the world's accumulated surplus. Tho Department has shown no desire unduly to force its wools on tho market, and the committee suggests that the Government of New Zealand should request the Imperial Government urgently, by telegram to give an undertaking not to unduly force its wool on the market, but to hold stocks firmly, and only place them on the market in such quantities as will be absorbed with the 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 in crossbred values would hit the British Treasury. "Eighthly, the committee thinks that it is clear from the above that crossbred wool has a future and that if those growers financially able to do so hold their clips until consumntion and change in fashion makemore impression on the stocks, this will assist the whole position. Someone must hold the wool. It is bettor for financially strong growers to do so than for speculators to step in.

The committee considers that the New Zealand Government should make the whole position known to the growers, and it urges those who do so to hold back their wools as long as possible. ''NinthJy, New Zealand growers could also assist the market profitably to themselves 1 by increasing the ewe flocks wherever the country is .suitable, so providing for afl increase oi meat, particularly lamb, the outlook for which the committee considers very 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, wool in New Zealand, where it is not such a. menace to the immediate future of the market as it would be stored in London. Further, the capacity of London to receive and store wool is limited at the- present moment, and before sending wool to London for sale growers should1 ascertain that it can be accommodated if they • are desirous of holding. Growers should hold in New Zealand, only sending to London if they mean to meet the market and take what J;hey -Tian get for it within a reasonable time of its arrival.

"My officers," concludes the High Commissioner, "have been present at the meetings • and generally concur in the recommendations contained in the report."