THE PRICE OF BUTTER.

New Zealand Herald, Volume XLV, Issue 13672, 13 February 1908, Page 6

THE PRICE OF BUTTER.

A BIG RECORD. POSITION OF THE INDUSTRY. CONSIGNMENTS V. CONTRACTS. A Cablegram published in yesterday's issue intimated that sellers were asking from 148 a to 150s per cwt for the. lonic's shipment of New Zealand butter, due in London ou Saturday. This is a phenomenal price, one never experienced before in the whole history of New Zealand's export butter trade, and it exceeds tho highest price paid prior, to this season by a good deal over £1 per cwt. In fact, New Zealand butter is experiencing a real boom tiruo, and the state of the market, to anyone following the progress of the dairying industry, is becoming keenly exciting.

Tho lonic sailed from "Wellington on January 3, and she had on board 12,169 boxes of Auckland butter for the London trade. The total export for the fortnight during which this shipment was made from Auckland was 11,009 boxes, or 350 tons, and of this the lonic had 304 tons, which, taking even the lowest of the two quotalions, namely, 143s per cwt, so as to allow for a proportion of milled butter, represents a money value of £44,992, or over £2000 more than the whole fortnight's export was reckoned to be worth when the lonic left.

The price of 14% per cwt is netting to the buyers more, than Is 2d per lb f.o.b. As a matter of fact, the present prices are a surprise to factories and buycis alike. Although there were some at the beginning of the season who believed fair prices would rule, no one dreamed of 148s and 1503 per cwt. Kates for a long time were fairly firm at 116s and 118s, and then they commenced to rise rapidly. Tho highest price ever recorded before this season was 1275, which was attained a number of years ago.

A CORRECT FORECAST. That; the buyers who were fortunate enough to close contracts with factories have been reaping a golden harvest goes without saying, Tho previous season they lost heavily, and, naturally enough, looked to this season to recoup them. It has done so, and a long way beyond their expectations. At tho opening of the season, both the Hebald and Weekly News explained the position clearly, and strongly advised factories to hold off. A persistent effort was being made by speculators and foreign buyers to bear the market, and the Herald then stated that collectively £100,000 represented the loss during the previous season sustained by buyer* all over the Dominion, being the- amount paid on New Zealand butter more than it was actually worth on the London market, and this amount was what the buyers would have to make tip this year. The article went on to indicate that the prices at Home would go up to the true prices of tho previous year, and that there were various contributing factors in connection with the world's butter supply which.promised good .sound returns to New Zealand. The closing quotations last season, were Hid, but it was not expected that this season would open better than 10id for choice butter, and the Herald advised that, there was every prospect of consignors making much more as the season went on. The prices which have ruled this season show the truth of that forecast. Buyers were then offering 9£d to 9|d. The paper strongly combated the buyers' dismal prophecies' of low prices and foreign competition, and advised factories to consign. Moreover, in the agricultural columns of the Weekly News appeared this statement of tho position: —

''We recognise that owing to the fact that New Zealand dairy-farmers, for some inexplicable reason, are tmable to combine and manage their business for themselves, tho visiting butter-buyer is, to a certain extent, necessary; but wo have no illusions regarding tho position that he holds. Whilst ho will offer and pay good prices we are quite willing to .welcome him; when he wishes to bear down values in order to recoup himself for losses made in previous years we are certainly not going to assist him in this work. It is quite true that prices for dairy produce in London at the present time are not quite so favourable as they were last year; but they are still highly satisfactory, and the position of the butterproducer is really better than it was last year,' because the demand for butter in Great Britain is steadily growing, and the reputation' of New Zealand produce is widening every month. "If our dairy-farmers, instead of allowing _ themselves to be depressed by the opinions of people specially interested in keeping down the values of butter in this country wore to set themselves to the task of placing the disposal of their produce on a sound business basis it would be much to their advantage."

SELLING ON CONTRACT. These articles hud the direct effect of forcing the buyers' hand to a certain extent, and the contract price went up to lOid'to 10£ d, but a panic seemed to seize the factories, and two-thirds of the New Zealand factories sold on contract, fully three-fourths of the Auckland factories falling into line. At a moderate estimate the buyers throughout the Dominion, .collectively, must be reaping £200,000 on contracts, thus, - after deducting the losses of last season, netting £100,000 for the two seasons. The buyers did not, however, get all their own way in Auckland, and from their prices of 9j.d and 9|d they were obliged to go up to 10|d and \lO£d, at which tho bulk of the butter was contracted for.

Of course, it _ must be admitted that the present high prices may not last long. Any day. may see a drop, as the first butter of the Danish season comes along. In the present state of the market it is impossible to say how prices will go a fortnight hence; they may either rise or drop. There has been a general shortage and unfavourable seasons in all butter producing countries. Denmark has been finding new markets in Germany and on the Continent, and everywhere, as this papor pointed out at the opening of the season, the tendency was for the demand to increase at a greater rate than the supply. Then there has been less and less butter from Siberia, the war teaching the producers to send their butter East instead of West. Most of the Normandy and Brittany butter has been going to Paris, while Canada and the United States are sending practically nothing to Loudon this season. Thus the main onus of supplying the market was beginning to fall on New Zealand, Australia, and the Argentine. Again, tho Home Butter Bill fixing .the proportion of moisture at 16 per cent, has had something to do with the greater demand, because it checked the uso of New Zealand butter for milling or mixing purposes. The two largest factories in Auckland stood out from contracts and consigned. They are now receiving full benelit froni the. high prices.

EFFECT OF THE DRY WEATHER. The present dry weather is cutting down the outputs of all factories, and if present conditions continue (hey will all be practically closed down at the end of March. Nearly all of them have their outputs to the end of March tied up under contracts so that a rather serious position is bein«brought about. It really becomes a gamble on the weather. Pastures aro so 'dried un that thero is little or no hope of their recovering normal strength this season, and if present conditions continue factories will be closing down when they have filled contracts, thus leaving them no margin of time to make for local winter use; and the factories which have followed the practice of consigning aro storing in anticipation of high winter rates, so that they will benefit over again. Heavy rains now* would check the threatened st tage; they could not avert high winter j-iees. There cannot be .no stightest doubt that the South Island will suffer a very considerable shortage. The country in Canterbury and - Otago is the driest known for many years, and Southern houses aro already' trying to buy largely in the North. Ono of the largest Southern factories reports that its output ha* so decreased, even at this stage, that it cannot meet even its local requirements. It would not surprise those engaged in the industry to see butter on Auckland's own market.going up anywhere from Is 6d to 2s per lb before the winter is over. The prices at Home are rather bettor than Is 2£d F.o.b. here, " The difference between prices on. the Home market to-day and those at

which factories sold on contract is 4d j»er lb. That means that if the factories bad stood out and consigned they would be receiving ; 4d per lb more for their butter, whereas the buyers are getting that aa . profit. ... ■■ •'"' :

WATCHING DEVELOPMENTS. ME. WESLEY SPRAGG'S VISIT TO ENGLAND. The developments taking place in connection with butter in the great markets of the world are such as to afford the keenest interest to those connected with the dairying industry, and the New Zealand Dairy Association of Auckland has resolved, in order to keep abreast of the times, to commission its managing director, Mr. Wesley Spragg, to visit England, Franc/.-, Denmark.* and other countries so that he may observe what is going on iu the heart of the trade. Mr. Sprat's Ion": and intimate connection with, the dairy industry in Auckland, dating back really to the inception of the industry—he being the one to first successfully run a factory—well qualifies him for this commission, and the information gathered on the tour will undoubtedly prove of great benefit to his association. Jn the course of a conversation with a HERALD _ representative yesterday Mr. Spragg said his tour was purely on account of business. _ With interests of the magnitude the. Daily Association's affairs had attained, it was imperative that the management should be in tho closest relationship with the markets in London and elsewhere. A fraction of loss occasioned through carelessness or want of intimate knowledge, multiplied by the very many thousands of tons ■of produce shipped to London annually by the association, would annually represent p. very considerable sum, and in these days it was not advisable to run any risk of making these losses of fractions. You will have some important developments to watch?" "Yes," said Mr. Spragg, "developments are taking place and new requirements are arising. New methods are being suggested, all of which require close investigation, and no investigation could be quite satisfactory made from this end, 16,000 miles away. To got the best results investigation must be made on the spot. A short interview will frequently ■ accomplish more than a year's correspondence, and a look at appliances or direct, observation of methods and requirements will sometimes prevent what would otherwise be the waste caused by several seasons of blundering attempts to understand distant conditions." When the subject of London agents was mentioned Mr. Spragg said it happened that the association's engagement with its London agents was 'entered into for seven years from the date of the inauguration of the co-operative form of the company. This was the seventh season, and while the association expected to continue the excellent relationship which had all along characterised the business connection, the present was an opportune time for finding out on the spot, all that could be learned of marketing conditions. In the course of further conversation-Mr. Spragg said he expected to visit Denmark, France, and other portions of the Continent to learn all ho could there, and, on his return through America, ho desired to find out what that progressive country and Canada had to teach New Zealand in connection with dairying. It was just 10 years since he had visited tho Old Country, and much happened iu 10 years. Mr. Spragg, accompanied by his wife and some members of his family, will leave by the direct steamer Corinthic, which sails from Wellington on February 27, and he expects to return in August.

A HAWERA STATEMENT. With the present high price of butter the difference between the returns of a company which consigned this season and one that sold at the average price is very marked {says the Hawera, Star). On a 50tori output per month those, who sold outright lose about £1000 per month. A well-known Hawera settler state's that a c'reek on his farm that never before has been without water in it is quite dry now. He believes that this is the worst spell of drought, in his experience. In 1895 the district was six weeks without rain. f —■■ THE LONDON MARKET. [BY TELEGRAPH.— association.] Wellington, Wednesday. The National Dairy Association received advice from London by cable to-day that New Zealand butter had sold at 150s per cwt. The mark'*'-' for cheese is firm, with an upward tendency,. By Telegraph.—Press Association.—Copyright. (Received February 12, 11.42 p.m.) London, February 12. The high prices are somewhat checking tho activity _of the butter market, but, holders remain firm.