BUTTER PRICES

New Zealand Times, Volume LIII, Issue 12395, 15 March 1926, Page 3

BUTTER PRICES

PROSPECT GOOD FOR FARMER MARKED FALL IN PRODUCTION MUST AFFECT MARKET (By Telegraph.—Special to “Times.”) AUCKLAND, March 14. Butter prices were falling fast last December, and dairy producers were fearful lest the London market should collapse. The reason for the sudden downward movement was the anticipation of the effect of the British seamen’s strike. While supplies of butter were held up in New Zealand and the London market was almost bare of New Zealand produce in November and early December, exceptionally heavy supplies arrived in London in the following two months. Had these strike accumulations all been unloaded on the Home market the effect must have been serious, but the New Zealand exporters rationed the market, with good results. THE REVERSE HAPPENED For this reason, the fears of the producers that a slump would occur in the London butter market as the result of heavy supplies reaching Britain from New Zealand and Australia early this year have no* been realised. As a matter, of fact, just the reverse happened during January, when a total of over 14.000 tons arrived in London from the Dominion. The market improved compared with January, 1925, when the arrivals fc,om New Zealand totalled only 8225 tons. Last month prices were maintained at a standard which showed a better average ngure than that in February, 1925. In. the circumstances, the prospects of dairy farmers realising good returns for their operations this season appear to be excellent.

Commenting on the . -matter, an Auckland exporter said there were still certain factors to be considered before an opinion could be advanced that this season’s operations would show returns as good as or better than those of last season. The prospects, however, appeared to be good. ' The suggestion made in December, that factories should so regulate supplies in January and February as to cover the two months evenly, had been generally adopted, and the market has sustained no violent fluctuation due to oversupply. It had. remained remarkably even at what might be termed a payable prices, although considerable quantities of butter had been placed in store.

DANGERS OF STORING Everything depended on the quantity of stored butter that would he held when supplies from British and Continental producers became available. If an early season were. experienced in the Northern Hemisphere, some of the Dominion factories might be caught, with a considerable surplus on hand, and would be compelled to take a comparativelv Tow price to clear their stocks. This danger had been increased, it was stated, by -the fact that certain factories had placed reserves on their product, and when prices reached the reserves had increased the limits. This action was entirely at variance with the policy of feeding the market judiciously, and might result in dangerous accumulations being made. In such case, the only thing that would save the situation for the Dominion producers was a late season, with diminished supplies from the Northern Hemisphere. Another factor to be considered In analysing the position was the decrease in production of butter in the Dominion, compared with that of last season. The butter graded in New Zealand last January showed a decrease of over 17 per cent., compared with January, 1925. The decrease for the six months ended on January 31st was 13.7 per cent. Considering that New Zealand was now such a large supplier to the British market this decrease could not fail to have a material effect on prices. CONTEST WITH RETAILERS At present there appeared to be 'a contest between the retailers in Britain and the factories that weire storing their butter. The former were only buying from hand to mouth, apparently waiting for the release of the stocks that would have to be made when supplies from Britain and the Continent became available. If any demand for butter set in from the Continent or elsewhere in the immediate future the position would he improved immeasurably. The chances of such a possibility were difficult to estimate locally, hut recent buying operations in Auckland suggested that the operators, acting on behalf of the British bouses, had confidence in the future of the market. Within the last few weeks there had been an active inquiry for butter, and sales had been made at Is s|d per lb, f.0.b., for March output. This figure represented an increase of about 16s per cwt. on the present London quotation. It should not be forgotten, however, that sales were made this season up to December as hisK as Is 7fd per lb f.0.b., equal to 205 s per cwt., and the same butter to-day was being sold at about 170 s. per cwt. The operators who were buying now at prices in advance of London quotations were running the same risks as those who bought earlier in the season.

THE CONSUMER’S PRICE A point to be noted, and one that may be of special importance, said the exporter, was that prices which have been maintained this season on the London market should not impair the consumptive demand. The present quotations, which had, roughly, been maintained for a considerable time, would mean a retail selling prioe in London of about Is 8d to Is 9d per lb. A comparison between prices this season and those of last shows that quotations in London at the beginning of last November were 210 s per cwt., and at the end of the month 2065. In November, 1925. prices opened at 217 s aDd closed at 210 s. In December Ibis season prices opened at 102 s and closed at 1725, compared with 204 s and 189 s in December, 1924. It has to lie remembered that this season Kie possibility of' an unprecedentedly large supply from New Zealand and Australia shortly after Christmas disturbed the market. This prospect did not materialise, and January figures this year ranged from 170 s to 178 s, compared with 158 s to 166 s for January, 1925.