OUTLOOK FOR BUTTER

New Zealand Herald, Volume LXIX, Issue 21346, 22 November 1932, Page 12

OUTLOOK FOR BUTTER

CONCERN IN INDUSTRY

REGULATION OF SHIPMENTS

AUSTRALIAN MOVE CONFIRMED

Tho depressed state of tho London batter market is viewed with concern by all sections of the dairy industry in New Zealand. Forward buying is practically at a standstill and merchants stato that tho possibility of a curtailment in exports in tho immediate future cannot bo disregarded. Tho fooling is thafc tho British market is likely to bo taxed to tho utmost in tho next few months.

Confirmation of tho report that Australia has decided to restrict shipments to London by 20 per cent after December 1 is contained in Australian newspapers received yesterday. The Melbourno Ago states that tho decision was mado by the Australian Dairy Produce Export Board last week, owing to tho heavy supplies of butter from Australia and New Zealand and expectations of an expansion in future shipments depressing tho London market. It is hoped by tho decision to spread tho season's shipments over a longer period than usual and to ensure a continuity of supplies for tho London market. Expansion of Output The Age states:—"The output in Australia this season, assisted by very favourable weather, has been exceptionally heavy, and recent shipments to London have reached record dimensions. Tho Victorian output is about at its peak and, with production in other States now improving rapidly, exports during tho next few months are likely to show a further expansion. Tlie New Zealand output and shipments havo been correspondingly large, tlie effect of which, together with the large Australian shipments, lias been to depress London market values. Becently quotations have fallen to a lovel for which it would bo necessary to go back to 1894 for a comparison. It is hoped by reducing shipments ia tho immediate futuro to improve tho sentiment" of the London market and to assist in lifting prices to more payable levels." Although it is customary for the New Zealand Dairy Produce Board to "spread" shipments from January onward, it is stated that an earlier regulation may bo possible in order to supply the market judiciously. The danger lies in accumulating stocks too heavily in New Zealand if an earlier start i 3 made. It was pointed out yesterday that London buyers acted on production figures, as well as shipments, and tliey would not be inclined to extend their operations too widely if large stocks were held in tin exporting countries. For this reason, it is claimed that the Australian decision may not havo the full effect anticipated.

" Unpayable Levels"

"At present prices are touching unpayable levels and only a certain percentage of farmers can continue, to pay their way if no improvement is effected," said a prominent merchant yesterday. "There is no indication that prices will go any lower and it is possiblo that the bottom has been reached. Consumption in England must have be>en increased considerably, as the retail price should be down to "is a lb. now."

It was mentioned that the difference between Id and 2d a lb. on butter-fat would mean a lessened income of between £SO and £IOO to the average farmer, who 'had a herd of", say, 40 cows, and a production of about 10,0001b. of butter-fat. Nevertheless, this would bo partly offset by increased production for the same overhead cost. It was pointed out that the average farmer was at present only "paying his way" and the mortgagee generally felt the ©ffect of an unpayablo price.