THE PRICE OF BUTTER.

New Zealand Herald, Volume LXI, Issue 18895, 18 December 1924, Page 12

THE PRICE OF BUTTER.

LONDON MARKET OUTLOOK.

PROSPECTS OF WEAKENING.

REPORTED OFFERS DISCOUNTED.

[BY TEIJEGRAPH. —OWN CORRESPONDENT, "j HAMILTON, Wednesday.

A peculiar position appears to obtain in the butter market inasmuch as the price of butter .ias been reduced locally in face of a report appearing in Monday's Herald that the London market was stronger and that London buyers were making offers for butter as far forward as February, at prices showing a decided increase over to-day's parity.

"I was astounded," said Mr. \V. Goodfellow, managing director of tho New Zealand Co-operative Dairy Co., Ltd., "to read the report in Monday's Herald that London buyers were operating at such prices, because there was nothing in the world's position to justify such action. I therefore immediately despatched a cablegram to Mr. J. B. Wright, our London manager, repeating the press report and asking for information, as his regular week-end cable, which arrived the same morning, had merely indicated that New Zealand spot stocks were lightened and that ho anticipated good prices until the middle of January, when the extra arrivals from the southern hemisphere would bo likely to reduce prices. Owing to cable delays his reply has not yet coma to hand.

"The Herald report, on appearing in tho Australian press, provoked astonishment both in Sydney and Melbourne," said Mr. Goodfellow, "becauso of its conflict with the statistical position, and I have had cabled inquiries from both these cities asking for further information. Australia is reported to bo selling freely ;it Is 3d, f.0.b., for Eastern export, nn l 3s locally, but with no London offers. Naturally, therefore, they would be interested in learning that some favoured quarter in New Zealand was receiving buying offers at up to Is 6|d, f.0.b., for shipment as far forward as February. General Weakening Predicted.

"A curious fact about the whole tiling," said Mr. Goodfellow, "is that the representatives of the. London buying houses in New Zealand themselves seem to have no knowledge ''f these magnificent offers alleged to .have been received t>v certain companies. I have made full inquiries among the representatives of the best English firms and am informed by them that, in their opinion, there is no foundation for the statements that have been made. One of the best informed houses on produce statistics published in Wellington on the very day that these extraordinary offers were announced as being received in Auckland tho following report: ' All indications aro for a general weakening in butter prices from now onwards. Arrivals of New Zealand butter during December and January will show an increase on last season's arrivals, but we are of the opinion that heavy shipments from Australia will have a greater influence in weakening the market. Forward buyers of butter show practically no interest even in shipments now leaving New Zealand, whilo it is impossible to get buyers to bid for December make or anything further.' Heavy Stocks in Storage.

" The reason why those who know most about the butler export business take a conservative view of tho position," continued Mr. Goodfellow, " is because the world's statistics record unusually her.vy existing stocks in storage combined with extraordinary new season's production. On November 14, the Department of Af r> culture of the United States; stated tluifc the excess of stored butter in the United States at that date was 26,C00 tons o'at , and above that hold at a similar d;ite last year. A further report to hand by the last American mail states: 'On November 1, cold storage holdings of butter in the United State:!, amounted to 135,251,0001b.. as compared with 76,472,0001b. for November 1, 1923, and as compared with a fiwyears' average for November 1, of 86, i 13,001b. It is therefore apparent that lower prices must prevail in order that these holdings, together with tho current production, may be consumed. Current production is greater than at this time last year.' " This excess over and above the average of tho last five years constitutes a source cf weakness which already has been fel: on tho London market, where as late as November 18 American butter was quoted at 160s (equal to Is 3d f.o.b. New Zealand) compared with 208s for Anchor and SlOs for Danish. The menace of th'.' American excess is increased by the f; s ,ct that Australia is ■ experiencing particularly heavy production. Exports for the Commonwealth for the month of Octobor were 10,959,1761b., compared with 4.039,4961b. for tho same month last year. These figures give point to tho press news cabled a few days since that it was anticipated Australia's export would be four times as much as that of last season. New Zealand's production will probably be at least 10 per cent, greater than tho figures for the past year. Doubt Regarding Offers. "From this summary," said .Mr. Goodfellow, "it can be seen that tho world's butter- position does not warrant any sane buyer offering such fancy prices. The conclusion I have come to is that the report which appeared in tho Herald on Monday is an attempt on the part of some interested person to hoodwink tho public and humbug tho suppliers of co-operative dairy companies. These alleged offers are either bogus or merely nominal. For instance, wo have heard of one such inquiry at a fancy price with the stipulation that the grade should bo not less than points. Stocks of that quality, of coi-rst', are not available.

"Our action in reducing tho price of but ters to the Auckland public and also reducing the advance price to suppliers by one penny a lb. was dictated by a worldwide knowledge of market conditions and realisation of the inevitable course of market movements. Information as to supplies available shows that without any form of control or systematic regulation of supplies in London prices must come down when the very heavy shipments from New Zealand and Australia arrive in February, March am! onward. The butter being made now arid advanced against now will in all likelihood not lie marketed until February, March or April, when the market may be down to 160s, equal to about Is 3d f.o.b. Undoubtedly there will be more butter arriving in February and March than 'he people of the United K' - can consume and tho market will t lorefore depend entirely upon Continental buying to clear tho surplus. Experience ov- r a number of years shows that inevitably :ho London market drops when heavy supplies from tho Southern Hemisphere r;acli there in February, Marcli and April Last year butter made in December realised Is 2d f.0.b., its sale being delayed by the shipping strike anil this year in view if the heavy supplies available the position may be as bad tu both the producers and the public."

CONFIRMATION OF OFFERS.

THE OPOTIK! ASSOCIATION.

GERMANY NOW A FACTOR.

Confirmation of the high prices reported to have bj>en obtained in Monday's Herald was forthcoming last evening from Mr. H. C. Aiekin, of the firm <>i Messrs. L. Aiekin and Sons, who stated that the offers mentioned in the report were the actual offers received by the Opotiki Dairy Association. Offers of Is 5Jd for butter afloat, said Mr. Aiekin, were practically 2d per lb. lesi than the present London prices, so that the market might weaken to quite a considerable extent, and still be equal to the price offered for butter afloat. The whole position of the butter market was a riddle this year, he added. Danish butter, for instance, was quoted

afc 2403, and New Zealand at 2065, the reason being that Germany, which had been dormant last year, had now entered the market, and had been buying Danish butter for many months past. It was more than probable that, with a reduction of, say, 20s per cwt. on to-day a figures, Germany would bo a far moro active buyer than sho was at the present time. Though the production of the Southern Hemisphere "would be very much greater this year than the year before, the fact that Germany was in the market \va3 likely to lmvo a mora beneficial eiTect. . The offors reported to hava been made in Monday's Herald, Mr. Aickin peated, were actually the offers received by the Opotiki Dairy Association, namelv, Is s|d for butter afloat, and Is 6 3-8 d for February shipments. Ao word had as yet been received a3 to whether these offers had been accepted, arid it was unlikely that the former quotation would jo agreeable, in view of better possibilities in view, namely, as Mr. Wright vr is reported to have said, that "good piicfts were anticipated until the middle of January." "Ho had, however, made inquiries similar to those made by Mr. Goodfellow, and had traced another offer, received by a factory, fur Is 5Jd for Decern bor-inako butter. "Tho fact," ho continued, "that the Co-operative Dairy Association has not been approached with a similar offer is no doubt due to the general knowledge that its selling policy is on a consignment basis so far as Great Britain is concerned, and that factories which are known to sell their output from timo to timo are always more likely to be in receipt, of offers when there is an improvement in t.lio -narket than a company that is generally known not to sell its butter forward."

AN INCREASE REPORTED.

TEMPORARY SCARCITY.

Dalgety and Company, Limited, are in receipt of the following cablegram from thnir head ofliee, under date, December 15:—Since our last wire butter prices are 2s higher, duo to temporary scarcity and Christmas trade.