AN OPTIMISTIC WOOL NOTE.

Otago Witness, Issue 3524, 27 September 1921, Page 8

AN OPTIMISTIC WOOL NOTE.

The present seems ail opportune time to sound an optimistic note in the wool business. Prices have been lower than they are to-day, but not much, and apparently we have touched bottom, to learn that there is life in the wool trade still. According to the most recent cables from Home Dominion wools are meeting witli a fair demand, 95 per cent, of the last London offering being sold. The New Zealand Wool Committee received the following advice : —“London sales closed on Thursday, 15th in.st. ; there was good tone and competition. It is estimated that the Home trade took 55 per cent., Germany 30 per cent., and France and Belgium 15 per cent, of the total offering. Compared with opening rates, good greasy and scoured merino advanced 10 per cent. ; inferior merino 5 per cent. Fine crossbred 5 per cent. ; medium and fine crossbred, par to 5 per cent, ; coarse crossbred show no change. Slipes irregular, 5 to 10 per cent. ; advance. A comparison of prices is given below :

Before sounding unduly the future of wool one must bear in mind at least two factors which tend to “brake” any upward trend of values—viz. : the inability of the communities within or without the Empire to buy as freely as of vore; and the increased costs of running machinery, the latter, of course, entailing idle mills. Wool folk have scanned the horizon for something better than B.A.W.R.A.j but so far have not been successful, as so many are convinced in their own minds that the B.A.W.R.A. wool would be better in the store rooms of the manufacturers than scattered in the various storehouses throughout the world, liable—in the minds of the trade-—to tumble into the market at any moment, and adversely affect the woollen trade. After all and done, a good deal can be said in support of the economic law—supply and demand. In the final summing up this law must be considered, and it is just here that there appears a faint silver lining to the wool clouds ahead. The Hon. W. Nosworthy, Minister of Agriculture, is speaking. In a statement made recently, in regard to the present prospects of the wool market, he pointed out that in the many reviews of the wool position sufficient consideration did not seem to have been given to the great reduction in the number of sheep throughout the world. “Much has been made,” said the. Minister, “of the carry-over stocks of Imperial Government wool, which have obsessed the minds of producer, manufacturer, and consumer alike, but. when the worst is said, the total stocks held by the Imperial Government at the end of December, 1920, amounted to something less than the equivalent of the Australia, New Zealand, and Capo clips for 1919-1920. But is it not a fact that in normal times this quantity of wool, and perhaps more, would be held as a matter of course at the commencement of the marketing of a new clip by manufacturers in the United Kingdom, France, Belgium, and Germany? For once in the world’s history this wool has been all in one hand, counted and held up as a bogey before everyone’s eyes. Immediately after the war the world was starved for woollen goods, and tho demand forced up the prices for both raw and manufactured

cods to abnormal and unjustified prices, he orgy of spending had the natural u ling of empty pockets; and the sudden emu lion of demand coupled with heaving i-luff costs, labour "troubles, and the

delay in determining the German repatriations, and the basis on which business would be done with late enemy Powers, resulted in a panic, which brought prices down in a few months to the lowest this country has ever seen, and far below the cost of production. Comparison of the world’s flocks of sheep in 1914 and 192,0 indicates that every bale of the carryover wool will he needed for consumption, and the increased activity lately evidenced in maufaeturing centres justifies the belief that am. upward movement in values, bearing at least some closer relation to the cost of production, is now in progress. The foil owing figures are compiled from official statistics, and show the number of sheep in the principal countries producing wool with which New Zealand wool is in competition :

•Note. —Uruguay-— 1918 latest figures available. There is no suggestion, comments the Minister, that the production of wool in 1914 was in excess of the world’s requirements —-rather the contrary, as wool rose gradually in price from 1906 to 1914. Yet it is seen that in 1920 there were in those eight countries 71,817,314 sheep less than in 1914, the annual reduced pi’oduction of wool at 71b per head and 3501 b to the bale being no less than 1,436,346 bales. Of the principal Continental sheepbreeding countries the most reliable figures show that the flocks of France, Germany, Spain, and Italv combined have been reduced by over’ 10,000,000 sheep. Of Austria, Russia, and Turkey there are no late statistics, but even if the usual quantities were available from these countries, which is impossible, the wool does not come into competition with the wool of the Dominions. Then the statistical position regarding wool is now better than it was at the beginning of the wool reason. Returns issued by the New Zealand Wool Committee recently show that 459,000 bales of the current New Zealand clip had been disposed cf by the end of August. The clip was estimated at 590,000 hales, greasy, scoured, and slipe, and actual

sales in the Dominion had amounted to 221,000 bales, while shipments on owners’ account had totalled 238.000 bales. Some 131,000 bales remained to be dealt with during the three months that have to elapse before next season s clip becomes available. These figures make it clear, says the Dominion, that the quantity of wool which it will be necessary for New Zealand to carry over will be small. Similar results for the Australian clip are shown in communications from Australia. and another eery important fact is that during this undoubtedly difficult season the British-Australian Wool Realisation Association’s stocks of Australian and New Zealand w r ool have been reduced by the sale of 680,000 bales up to July 31 last. The position thus disclosed seerns to justify a reasonable amount of hopefulness. The Imperial stocks of wool which have been the m-ost depressing factor in the market, amount now, all told, to Jess than one Australian clip, and the belief is strongly held in some sound quarters that every hale ox this wool will be required before long. This, on top of reduced flocks throughout the world, surely points to better davs some time ahead for flockowners. The figures show that tho present wool production is not equal to normal pre-war consumption, and at the same time the world is facing an undoubted shortage of woollen goods. It seems, savs the Dominion, not too much to hope that the realisation of these facts will induce manufacturers to fill up their warehouses in the not distant future, and

as soon as they do that the Imperial stocks of wool will cease to be a problem. It is stated that most of the available wool would be absorbed now if manufacturers were carrying stocks at the normal prewar level. The enormous consumption of wool in the Northern Hemisphere in normal years is shown in the following figures, which have been compiled from reliable sources. The figures show the

average yearly production and consumption of raw wool in Europe and North America for the period 1909 to 1914 inclusive, the bale being reckoned at 3501 b :

It is not suggested that the danger-point has passed or that the turn of the tide which is now apparent would justify the premature abandonment of the present sound arrangements for minimum reserve prices and for the spreading of sales over reasonable periods. These measures are admitted to have stopped the “rot” in April and May, and they will continue to be required until a position of safety has been .reached. But. it does seem possible that history will record the happenings in tile wool market during the last nine

1 l! ' !i one of those unnecessary panics I -' n; use at different times occurred, j particularly among holders of primary I products, and often following periods of abnormally high prices. Careful consideration of the above facts will, it is hoped, assist to produce a more hopeful financial outlook for our sorelyembarrassed woo Ig i*o \v er s.

Jan. Apl. June Aug. Sep. 2G 15 20 30 15 56’s, yielding 60 per cent. .. — 50’s, yielding 65 14 15i Hi-15-i per cent. .. 14J 44/4(Vs, yielding ni 13 ll 11J 72 per cent. .. 10 36/40's, yielding n 8i n 74 75 per cent. .. 81 5i 62 6 6

No. of i\ T o. of Sheep Sheep Country 1914. 1320. L> lilted -Kingdom .. 27.88(5,005 25,107,806 Cnitecl States .. 49,710,000 45.037,000 Canada .. .. 2,175,302 3,720,783 Argentine .. ,83.546,000 45,309,419 Uruguay .. 20.286,293 *11,472,852 Seu'h Africa .. 35.710,813 29,305,241 Australia .. 78.600,334 73,00*2 250 2vew Zealand . . 24,798,763 23,919,970 Totals .. 328,722,033 256.305,321

Production — Lb, Bales. U 7i i te d Kin ad o m .. . 136,000,000 388,000 Continent 420,000,000 l,200,0u0 North America 330,000,000 943,000 Totals 886,000,000 2,531,000 I m po rts f rom — Lb. Bales. Australasia 854,000,000 2.140,000 South Africa. .. 131,000,000 374,000 River Plate .. .. 449,000,000 1,283.000 Other sources .. 247,000,000 706,000 Totals .. .. 1,681,000,000 4,803,000 Total production and imports annually 2,567,000,000 7,334,000