COMMODITY MARKETS AND TRADE.

Manawatu Standard, Volume LVI, Issue 8, 7 December 1935, Page 5

COMMODITY MARKETS AND TRADE.

' THE SHARE MARKET. (By “Penloo.”) ;{VS ■ The trend of values on the stock ex--'changes during the next four weeks is W',-likely to bo slightly downwards owing to profit taking, and business is sure to be slack, which is a seasonal feature. The year has been a good and pro'\:y fi table one for sharebrokers. With few breaks business has been good throughiti; out the year and values have shown a fc'.' finning tendency. The depression as we ; |(. know it, started in 1929, and reached its worst ir. 1932. Since then there lias ■3'; been a gradual improvement, which T lias been particularly noticeable in the f; sterling block, thanks to the statesinanslike handling of the situation by the British Government. A depression is not a chronic feature of our economic life. A slump follows a boom, and a boom follows a slump, and neither can ever be permanent. The beginning of economic recovery dates from 1933. It was very apparent last year, and more so this year, and if nothing unforeseen happens there should be further improvement next year. The basis of economic improvement is confidence, and the sterling bloc shows the greatest measure of progrss toward recovery, because in that group there is the greatest measure of confidence. The stock enchange or security market is a reliable barometer of confidence. Business on the stock exchanges of the l>ominion was good during the year, because we had adjusted our affairs to comply with the conditions arising out of the high exchange and the sales tax, and having made such adjustments an increase in general business became possible, and confidence was . slowly reviving. We will not attempt a forecast of 1936 until the political position is clarified, for whatever may be said to the contrary, the quality of a country’s administration has a direct influence on the business or economic conditions of the country. As already stated business on the stock exchanges will ease now, and all will think or holidays. The retailers, however, should have their turn during the next fortnight and turnover should be decidedly larger than last Cnrisunas, and for the simple reason that we have got a long way furtheron the road to complete recovery since the close of 1934. HALT IN PROGRESS POSSIBLE. The sterling group in relation to the rest of the worlu is comparatively small and therefore the volume of business that can be done within that group, is necessarily limited. It is probable that the limit has not yet been reached, but that it will be reached is quite obvious. There would then be a halt in economic progress but not necessarily a recession, the Economic Committee of the League 'of Nations has put the position very clearly in a pamphlet submitted to the Council. The main endeavour has been to demonstrate the close and even inseparable character of the relationship between national economy and what is called external economy, and with this object sets out simply certain elementary facts to show the error underlying the conception of national interest and international interest as mutually opposed, whereas they are two aspects or the same economy. There is shown the effect of international trade on a national budget. If trade encounters obstacles, the committee points out, among the first to suffer are producers—industrial or agricultural—who work for export. In every modem State such producers constitute a large element of the population. As they lose their foreign custom these producers cut down their purchases. Textiles buy less from spinning mills; the engineering trades buy fewer metallurgical products; agriculturists smaller quantities of fertilisers, and of industrial products. The wave of depression starting over the frontier spreads slowly over the whole country. First, certain machines come to a standstill, staff is dismissed, a few factories close down, unemployment becomes chronic. For the budget of the State there will be two consequences, the weakening of the taxpayers’ capacity and the growth of expenditure under the heads of unemployment and other relief necessitated' by the economic depression. Among other effects are contraction of transport and decay of tourist traffic. These conditions exist, more or less, in all countries, which afford some proof of the interdependence of national and international economy. Britain and the rest of the sterling group have made great economy progress, but unless the obstacles in the way of international trade are removed there must be a limit to the progress. At present there is no indication that the nations are desirous of freeing international trade. THE WOOL MARKET. At all centres where wool sales have been held this week the market has shown considerable firmness. At Napier, it is claimed, that the sale held there on Monday witnessed a rise of 25 per cent, in values, as compared with the corresponding sale a year ago. The catalogues included a good deal of old wool which sold as readily as the new season’s clip, buyers being very keen to fill orders. The competition was good and a pleasing feature was the activity shown by Continental buyers. About 96 per cent, of the wool offered was sold, and that also is satisfactory as it shows that growers are not as imaginative as usual in believing that prices will go higher at subsequent sales. It was not the case in the last. The ■Wellington sale is being held to-day and the same run of good prices should be recorded. Germany in the past has been a great importer of wool from both Australia and New Zealand, but the economic condition in that country in recent,years has greatly disturbed the position. A Continental review in mid October stated that in the wool and top sec,ions, the renewal of the Reich’s overseas compensatory agreements has banished fear of further embarrassment through inadequate supplies, although the shortage of foreign exchange still interrupts the even flow of outside business. The review states that the scarcity of Merino and the finer crossbred counts frequently <r a ve the German market an unwarranted quiet aspect because inadequate unsold stocks did not even suffice for the officially restricted buying permits issued at the time. As a result of commercial impediment, - local merchanting contracted and lost much of its former freedom of operating. Germany wants wool as she does several other raw materials hut economic conditions have necessitated other trading nations to impose commercial impediments. THE BUTTER MARKET. The London butter market is becoming disappointing. The price of New Zealand butter has now dropped to 95s per cwt. and the market is reported weak. It is most unusual to see the market ’sag at this time of year There should be a good demand just now in view of Christmas, furthermore it is reasonable to suppose that some of the Continental butter

exporting countries other than Denmark, are sending less to London. The fall in the price must be due to an excess supply, but if the retail price in England is reduced, as no doubt it will be, there should be a good clearance of stocks. Eight or nine weeks ago butter touched 127 s per cwt.