FUTURE WOOL OUTLOOK

Otago Daily Times, Issue 23517, 3 June 1938, Page 26

FUTURE WOOL OUTLOOK

WORLD SITUATION LAST YEAR’S DEVELOPMENTS. (From Our Own Correspondent) (By Air Mail) LONDON, ApL 30. The wool-selling outlook during coming months is assessed in tfie course of a review just published by the Imperial Economic Committee of world wool consumption in 1937. “ Since the improvement which took place in wool prices at the end of 1937 was not maintained, general circumstances do not encourage a belief in a speedy return to the high levels of that year,” it is stated. “ Wool purchases by Japan and the United States are not likely to be on the same scale as in 1936-37 and there appears to be little propect of a much wider extension of German and Italian competition. “On the other hand, trade reports indicate lightness of wool stocks in the larger European consuming countries, and as buying was unusually small in the closing months of 1937, increased purchasing activity may be expected during the latter half of the 1937-8 season. There appears to be no doubt that most of the available wool will be wanted, as there are limits to which substitution can be carried. Consumer purchasing power has suffered setbacks, but the lower price of wool makes it appear extremely reasonable and should stimulate sales. INTERNATIONAL FACTORS “The general international situation is one of the major factors influencing the wool market, where confidence plays so great a part and any improvement, as for example in the relaxation of trade restrictions, could not fail to have an immediate effect thereon." Activity in the wool textile industry in 1937 fell into two periods, the report states. From January to August was a time of generally rising prices, high rates of consumption, low stocks in consuming countries and a generally favourable outlook. In spite of the generally sound statistical position, the new season opened with a sharp fall in values. Buyers held back from the market and weak forward selling on both producing and consuming markets intensified the lack of confidence in the general outlook. By November prices were 25 to 30 per cent, below July levels.

REASONS FOR LOWER PRICES The chief influences causing the decline were: general uncertainty regarding the international and economic situation; the fall in industrial activity in the United States; the difficulties experienced by the French industry in meeting the increased costs of social legislation; the probability of restricted Japanese purchases, with an increased use of substitutes; and the continuance of the German and Italian selfsufficiency plans, with the consequent curtailment of foreign wool purchases. During September - November, therefore, the usual seasonal recovery in activity was much restricted, purchasers in all sections of the industry holding back until a stable price basis was reached. Stocks of wool in consumers’ hands remained light, however, and sellers of semi-manufactures adopted a protective attitude based largely on replacement costs. With the announcement of the extension of the Australian selling season, a slight recovery took place, which brought out an improved volume of new business, this upward trend being maintained until the Christmas recess. This temporary improvement was lost in January, when prices fell again sharply. All sections of the trade continued to limit their operations to actual requirements. A general tendency was noted in the United Kingdom to defer the placing of particulars on standing contracts, which were often in good volume, and machinery actively suffered. _ . In general, international trade in manufactured goods imnroved in 1937, although it remained well below pre-1930 levels. The United Kingdom, Italy and Germany all increased their exports, but those of Japan were not maintained, and French exports remained very small as compared with their depression volume. The United Kingdom accounted for about half of the total exports of wool tissues from European countries. Japanese exports were slightly lower than in the previous year, reversing the upward trend in evidence since 1931. France again took first place as a world exporter of tops, providing 43 per cent, of world exports, as compared with 34 per cent, supplied by the United Kingdom, where the trade was affected by the cessation of Chinese purchases. Though exports of yarn continued to decline, the United Kingdom’s exports comprised about 28 per cent, of the world total. The trend towards the development of domestic industries in the smaller countries continued in 1937. Countries such as the Central European and Balkan States and Turkey have extended their manufacturing capacity, while Argentina and Australia are using increasing quantities of their own wool. Indications are that stocks in European consuming centres were at unusually low levels in 1937. Even when actively declined toward the end of the year no material increase took place because imports were also smaller than usual. At the end of the year stocks were approximately the same as at the close of 1936. ’ United States stocks were higher than in 1936 for the greater part of the year, but toward the close fell below the figures of 1 j months previously because of smaller imports. Stocks in Japan reached record levels in May and June, but since then have fallen sharply. _____