THE WOOL POSITION

Otago Daily Times, Issue 23108, 6 February 1937, Page 20

THE WOOL POSITION

U.S.S.R. EFFORT (From Ova Own Correspondent) (By Air Mail) LONDON, Jan. 13. The Financial Times devotes a leading article to the consecutive high records for wool which have been a feature of the Sydney sales. It is necessary to go ; back several, years to find a parallel. The figures issued by the National Council of Wool Selling Brokers of Australia bear out the anticipation of a small increase in Australian supplies. There is little hope of any immediate substantial increase from other sources. "The prospect," says the writer, " favours a continuance of present conditions, involving an avid demand and rapid absorption of any offerings. The marked change in the attitude of Japan since the settlement of the dispute gives an additional element of strength to the side of demand. Buying by Russia has been an important factor in the Lon- 1 don market, and is expected to.have an increasing effect as time goes on. "In normal times the new high record price achieved by wool might be regarded as a matter for unqualified satisfaction. Demand for an essential commodity of this kind has a special interest for. this country, where it is the staple of a leading industry, and for the Empire, one of the largest producers. The situation dn Europe and elsewhere brings in certain factors which complicate the situation. Devaluation of currencies and the general trend of world trade have certainly improved the standard of living and increased spending power. On the other hand, the expansion of armed forces implies a temporary if urgent demand, which tends to obscure the true market position. The intensive effort being made by the U.S.S.R. to produce its own supplies is not regarded in well-informed quarters as a matter of immediate importance."

JAPANESE SPECTACULAR ENTRY The Bradford correspondent of the Statist deals with Japanese.influence on prices. One of the arguments used by Australian selling brokers and land companies in favour of pastoralists selling all their clips in their own centres (he writes) is that they have the advantage of Japanese competition, whereas * wool consigned to London has to fare as best it can without it. After the experience of the first half of the present season, during which Japan bought nothing, this argument loses some of its force. If the events of the past six months prove anything, it is that.no one country can influence wool prices in the way it desires, unless the majority of the other buyers happen to be inclined oh the same lines. Though there was no Japanese competition in Australia for five months, prices advanced, and no doubt there has been disappointment in Tokio that the boycott affected, the market so little. Neither Japan nor any other country that has become accustomed to, using large weights of wool can get on without it/and if it cannot be oh* tained from one source, it must be obtained from another. Japan's entry into the South American and South African markets meant fighting German competition, which was specially favoured by trade agreements. . . . "The re-entry of Japan into the Australian market will tend to cancel the disturbance Of 1 the world's wool, exporting and importing trade, and bring normal freight routes into use again. . : . It is anticipated that she will not take less than 120,000 bales from New Zealand in the current season, and her purchases in South Africa and South America may make her total from sources outside Australia equivalent to 400,000 bales. . , ...Many importers in Europe would like to know how- far Japan has readjusted her machinery for the manipulation of crossbreds. It may not; be impossible for her to take 300,000 bales of New Zealand crossbreds, but if she does so she will either have' to reduce purchases of Australian crossbreds or adapt her carding, combing and spinning from fine to coarse wool. "Even ; without the spectacular entry,of Japan into the New Zea-

land wool market this mnmoo, tba cheques received by growers would have been much greater than a year ago, Other- growers of crossbred wool managea to make good prices a year before the advantage came to New Zealand. -This year New Zealand wool is selling well in line with similar produce obtainable m other countries. Perhaps Japan and the United States are responsible for the last lid to 2d per greasy lb being paid. SUSTAINING THE PACE . " English buyers have taken much less than their normal quantity so far this season, but will have to come in sooner or later. When the season began, Bradford importers said that, if they were New Zealand growers and had their clips shorn, they would sell them in the nearest centre as quickly as possible, because Japan and the United States could not keep .up the pace . they had set. The general opinion here was that Japan could not have kept on buying 50 to 60 per cent, of every catalogue, as she started to do last November. It is still held that, such a pace cannot be sustained throughout the rest of the seaspn, and the surmise that better prices ;wlll be made by selling quickly-in ,J New Zealand centres rather than by shipping to London is beginning to be PROSPECT OF PRICE MAINTENANCE "A smaller" weight of New Zealand crossbred wool will be offered in London this year by merchants who had bought, with the idea of reselling here at a profit, ..The present level of prices frightens speculators. On the other hand, certain European countries have to ration their foreign, currency very carefully, but must buy wool, in London. It will not be surprising if some. Bradford firms, who, have not yet secured their usual quantity in New Zealand are compelled to buy in London. The New Zealand selling season appears to have been planned to finish in three, months from now, and very little crossbred wool will be obtainable south of the equator for six months after that,. At the moment there seems to be an excellent prospect for the maintenance of current prices."