RECENT BUTTER SLUMP.

New Zealand Herald, Volume LIX, Issue 18041, 16 March 1922, Page 6

RECENT BUTTER SLUMP.

SPECULATORS' -OPERATIONS..

DEAL IN DOMINION PRODUCE

PRICES FORCED DOWN.

The effect of the operations of speculators in dairy produce was the subject of some remarks by Mr. W. Goodfel'ow, managing director of Hie New Zealand Co-operative Dairy Company, Limited, who returned to Aucklaad yesturday from a visit to the United States, Canada, Britain and the Continent.

Air. Goodfejlow said the chief object of his trip was to open an office in I London for his company, and to appoint! a Euiopean manager to control the sale j of the company's produce in Great Britain and the Continent and in Eastern America. Arrangements were made with Mr. J. B. Wright to accept the position as from July next. During tho war Mr. > Wright, organised tho purchase and sale in Britain of local and imported cheese for the Imperial Government. i Referring directly to the mattor of ] marketing New Zealand dairy produce, i Mr. Gooafellow said that before he left London a definite price-fixing scheme had I been established, which, if extended to embrace other co-operative companies, j would prevent speculation. Under exist-1' ings consignment conditions, Mr. Good-! > fellow stated, London was the speculators' ' paradise. The defects in tho present j' methods of shipping produco on consign-1' raent were obvious to anyone who had ( had an opportunity of gaining inside ] knowledge, and of watching the result of j the greatest smash in produce prices ever |' experienced in the history of the Do- ' I minion |' It was an axiom among speculators ' that no money was to be made on a high ' market, and that, therefore, the first |' thing to do to make conditions right for j speculators' profits was to smash the ' market by forcing sales of consignment ' butter and undercutting the market. It ! was not unusual for butter to be sold at from 5s to 10s below the recognised 11 market price, and further reductions were'' made as the general price fell. There ' was no doubt some of the record returns ' obtained by consignment houses this season would be from those firms who ! broke the market. These people sold out quickly, and let the market down, while I' those who held on in an endeavour to | \ stay the stampede had ultimately to sell,! at the lower price. If they had all stood firm, factories would have realised values ! greatly in excess of even tha highest , values secured. When rrices weakened the Board of'] Trade became nervous and under pjcmis- ■ sion from the Treasury offered a tremendous quantity of butter at 84s a cwt for Australian and 100s for New Zealand, and this had a serious effect upon the market. The action of the New Zealand i Government in coming to the rescue , would have been a srood thing and would have enabled a stable market to be fixed, but when it became known privately in London that the New Zealand Government would accept a joint account purchase! certain merchants immediately got busy and within three days, befure official Information arrived, the whole of ' < ♦he remaining 6000 tons of New Zealand ) butter had been purchased from the Board of Trade at from 110s to 113s a cwt. J Shortly afterwards the whole of the old ■ Australian stocks were similarly disposed ; of. Prices advanced rapidly (Ind new' ( reason's butter was soon up to 130s and. j 140s again, but it never regained its true, | value. I, In November. Mr. Ooorlfellow laid the!, estimated weekly consumption (if butter j in Great Britain was 2500 tons. The re-), duced price simulated, the demand, so J that eariv in .Tanuarv the weekly requirements increnwd to 4500 tons. I Afr. Good f e"ow said that the best , ; butter wbu'd HI at double the price of j ( martrarvn* in Britain, bnt beet margarine i, was preferred to inferior butter. This ] ( emnhasispd the necessity of .exporting , only o hifh-erade article. He said em ( nbaHcal'v that th» Ronrd of Trrde was in no w»v res'vinsiblo for the fall in price | during December. ,