LONDON TRADE REVIEW.

New Zealand Herald, Volume LVIII, Issue 17843, 26 July 1921, Page 5

LONDON TRADE REVIEW.

BUTTER MARKET STRONG.

WOOL TRADE STILL INACTIVE. GERMAN COMPETITION. By Telegraph—Press Association—Copyright. A- and N.Z. LONDON. July 24. The reduction of the bank rate to 5i per cent, has caused a more cheerful tone j on the Stock Exchange, with improved quotations for gilt-edged securities. But! those who anticipated increased business have been seriously disappointed, for all ! sections remain dull, especially industrial j stocks, to which cheaper money might ; have been expected to give a stimulus. Optimists are looking forward to a further reduction of the bank rate to 5 per cent, before the autumn demand for money commences. If this reduction occurs there may bea recovery of activity, but meantime there is no indication that investors are departing from their recent attitude of locking up money an fixed interest secun ties, rather than in speculative invest ments. A feature of the Stock Exchange is the firmness of recent gilt-edged issues, many of which were at a discount but are cow quoted at substantial premiums owing to the Treasury's embargo on new trustee issues while the Government's new bonds are under offer. Interest in the foreign exchange market centres in the dollar. The recent slump in American exchange is attributable mostly to speculative buying of dollars here and the selling of sterling in New York. This is likely to increase the supplj of dollar exchange in the autumn, when trade demands will be strongest. Prospects for the forthcoming Australian and New Zealand butter season appear very favourable, and traders anticipate a strong market till March. Owing to the drought in England, the output ceased exceptionally early, compelling Devonshire, Somerset, and other dairying centres to buy Government butter instead of marketing their own. Similar conditions have caused a shortage in America, and if the excliange position remains as now, America is likely to buy a large quantity in the near future. The drought in Europe has forcerL, France, Germany, Switzerland. Norway, and Sweden to buy Danish butter, and even Austria and Yugoslavia are finding money to purchase Danish. Some Continental buyers are also taking Australian and New Zealand butter from the British Government stocks, and several hundred tons have already gone to the Continent. It is estimated that trie Government stocks now total about 35,000 tons, which are likely to be exhausted by the middle of October. Thereafter Britain must almost entirely be dependent on supplies from Australia and New Zealand.

The outlook for cheese is equally satisfactory. The recent setback is largely attributable to the heated condition of one or two recent arrivals from New Zealand and Canada, which were offered at low prices, but the effects of the drought here will be permanent; no matter how much rain falls now, production must be far below requirements, especially as the heat caused largely increased consumption of cheese in prefer - j ence to meat.

The Yorkshire wool manufacturing trades are not showing much sign of revival, though a few mills are running full time, principally to work off arrears. No general increase of activity is possible till new orders arrive on a much larger scale, but some improvement may be expected from the lower cost of pro duction due to the revised combing tariff and the reduction of wages, as some wool has been held up pending adjustment of combing charges. Germany is a serious competitor in this branch of industry. Most of the German combing factories are busy, and are fully booked up for the half-year. French mills are also active, while a large number of Bradford plants are idle. Germany ds also buying largely tops and noils from France and Belgium. Messrs. Kregeinger, of Antwerp, report that Germany has been the dominating factor in the tops market, and is able to quote comparatively low prices for dress goods.