BUTTER PRICES

Otago Daily Times, Issue 23205, 1 June 1937, Page 10

BUTTER PRICES

NEW ZEALAND AND DANISH ELIMINATION OF MARGIN TREND ON LONDON MARKET (Per United Press Association) CHRISTCHURCH, May 31. Recent price trends on the London dairy market have shown one outstanding feature of great interest to the Dominion—the gradual reduction and ultimately the temporary elimination of the margin of Danish butter prices over Now Zealand. This is claimed by the Dominion marketing authorities as partial justification at least for the new methods adopted in handling deliveries of butter on to the British markets and an answer to the criticism made earlier in the year that the new policy was antagonising the trade and reacting unfavourably on the market. ‘We cannot claim that the reduction ot the margin is entirely due to our policy,” Mr G. A. Duncan (acting director of marketing) said when commenting on the position in a telephone interview with the Press to-day, “ but it is only fair to say that both the general trend of prices and the narrowing of the margin is an indication that there canol be much wrong with our marketing policy. It must surely be a fair indication that there cannot be marked hostility to or boycotting of our butfer, as was suggested in February when the price happened to be low. “ It is the desire of the department with the new system to ensure that the supplies should come on to the market as regularly as possible, and extended over as long a period of the year as is feasible,” Mr Duncan said. “In the past a buyer could not be sure that he would get certain quantities at stipulated periods, because the factories here sold o .right and altered the destination of the butter altogether. This new system has been made possible, of course, by the guaranteed price plan of the Government. “ There has been some criticism that the scheme entailed holding the butter in store for too long a period. Actually there has not been much delay in this respect. What has occurred has arisen from a desire to spread the shipments more evenly. The scheme will have a tendency to reduce the former wide fluctuations in price and has eliminated speculative f.o.b. buying, which so often left the agents and customers high and dry and probably accounted for the loss of custom as well. That is why our plan is quite attractive to agents at Home.” Mr Duncan mentioned another improvement which, he said, the guaranteed price plan had brought about on the market. The butter now being sold was markedly improved in quality. The system of payment adopted, giving quality premiums on grade points, had definitely led to an increase in high scoring butter and cheese. While butter prices this year have followed broadly the same trends as last year, there has in recent months been a gradual narrowing of the margin between Danish and jNew Zealand which ended in the middle of last month with the two prices equal and the margin temporarily non-existent. The margin in favour of Danish dropped from 22s per cwt in February, 1936, to 8s per cwt in May of the same year, but this year the decrease was from 35s per cwt in February to the stage where New Zealand equalled Danish at 108 s per cwt. This development is claimed to be partly caused by the change from outright selling on f.o.b. terms to the system of shipment and marketing adopted under the general guaranteed price plan, ensuring the regular arrival of butter and cheese of a uniformly high quality at the main distributing ports in the United Kingdom in quantities regulated to meet the market requirements. The most recent returns from London indicate that some margin has again been established, but it is still well below the narrowest 1936 margin. In fact, the figures on May 22 showed a margin in favour of New Zealand. The following table shows the price trends for 1937: —

New Zealand. Danish. 1937. ' January 30 89s 318s 120s February 6 86s 88s 122s February 13 85s 86s 122s February 20 83s 116s February 27 88s 89s 118s March 6 .. 89s 121s 122s March 13 .. 96s 98s 128s 129s March 20 .. 98s 99s 128s March 25 .. • • 100s 126s 128s April 1 , , 99s 100s 118s April 9 100s 104s 114s 115s April 16 .. 106s 107s 115s April 23 .. 107s 108s 112s May 1 108s 109s 115s May 8 104s I08s 110s May 15 106s 108s 108s May 22 109s 110s 108s May 29 .. 108s 112s 113s