PRODUCE PRICES

New Zealand Herald, Volume LXXII, Issue 22206, 5 September 1935, Page 10

PRODUCE PRICES

Two developments of the past few days -should help to hearten the farmer—the rise in butter prices to more than 100s in London, and the very cheerful tone of the Sydney wool sale. There will be warnings—indeed there have been—not to build too much on these price movements. The farmer, probably, has learned for himself, by sad experience, not to do so. Still, he can surely be permitted to hope that the upward movement in London prpmises a better season than any experienced for the past few years, and that the wool market will resemble that of the year before last rather than of last year. In both instances the explanation of keener buying is the same, lower stocks. With wool, there is the prospect of a substantially smaller clip in several important producing countries to support the expectation of better prices. .It is not possible to be so definite about butter. There was a time when the course of prices could be predicted with some confidence. From June onward they rose in the face of reduced supplies. Even when November brought considerable quantities from the Southern Hemisphere, the upward movement continued until, at the end of the year, there was a sudden drop; February and March bringing a recovery. This course was noted, by the Imperial Economic Committee, reporting in 1926, as having become firmly established. The normal sequence has been well broken since 1929 or 1930, and it is not safe to say it will be re-estab-lished. It may be hoped, for the sake of the dairy farmer, that the rise will be a good deal more than momentary, but beyond that it is not possible to go. To return to immediate circumstances, it is noteworthy how the market has responded to a reduction of stocks. It is a reaction which could not be obtained by merely withholding supplies, because the existence of that portion not offered would be known. The most certain way of maintaining prices is by having demand overtake supply ; and the only sound way of doing this is to foster and consolidate the demand.