PRICE OF WOOL

Otago Witness, Issue 3713, 12 May 1925, Page 28

PRICE OF WOOL

LONDON SALES. 20 PER CENT. DECLINE. LONDON, May 5. The wool sales opened with a 20 per cent, decline. The withdrawals were very heavy. 60 PER CENT. OF WITHDRAWAL. LONDON, May 5. At the wool sales there was a large of low crossbreds and few merinos. There was a crowded attendance at all sections, but many were Attracted only by curiosity. The bidding was slack and numerous lots did not attract a single bid, the withdrawals being estimated at fully 60 per cent. Occasionally there was good competition for super merinos, in which there was a decline of 10 per cent., which is less than was anticipated. Selling brokers will meet on Thursday to decide whether to curtail or abandon the remainder of the series. EXCESS OF WOOL IN SIGHT. LONDON, May 6. The Daily Telegraph states that no ierious London wool sales since Novemberpecember, 1914, have opened under such had conditions as the present one has. The whole trouble seems to be that there Is an excess of wool in sight, and prices have reached a level at which the consumer has rebelled. It is also probable that the first half season was conducted at too hot a pace, partly through the operation of speculators who had no interest in wool or wool textiles. QUESTION OF POSTPONEMENT OF SALES. MELBOURNE. May 7. The conference of the National Council of Woolselling Brokers and the Woolgrowers’ Association to consider the wool position and (he question of the postponement of the sales has been postponed till to-morrow. The feeling in the wool trade is that the May ami June sales should be cancelled. Already the Brisbane sules fixed for this week have been cancelled. Sir John Higgins, presiding at the annual mooting of Buwra, strongly deprecated the Introduction of gambling into the wool busiEess. The industry, he said, should not 9 in the position of being subject to booms and slumps. Ho stated that tho total amount received on the actual realisation Of Bawra, for tho Australian half of the E-over of wool and other assets, includInterest and £1.307,000 awaiting distion, was £30,186,000. Bawra’a total assets with trusts exceeded £8,000,000, and ft would be unwise to make changes in the directorate at such a critical time. The mreotors recommended that until the litigation was cleared up no stops bo taken to place Bawra in liquidation. After the litigation was over a meeting would be •ailed to bring about the liquidation of the {Mlooiation and the distribution of the assets.

TRADE’S HEAVY LOSSES. LONDON, May 8. The Morning Post’s Bradford correspondent affirms that on a low estimate from £8,000,000 to £10,000,000 was lost on wool bought prior to December. The money has gone into the pockets of Australian growers. This has crippled the purchasing power of our importers, whose only chance of even partially recouping themselves is by buying the balance of the clip in Australia, and the hulk of the next clip at a rock bottom price. It will take from two to three good years for the Bradford and West Riding to recover even a reasonable part of the money lost through misjudgment of the outlook last autumn. BAWRA AND LIQUIDATION. MELBOURNE, May 8. At the annual meeting of “Bawra” is was decided, on the recommendations of the directors, that the question of liquidation be left in their hands. MERINOS IMPROVE. LONDON, May 7. At the wool sales there was rather a better tone for merinos, due to improved Continental competition. Other sorts were unchanged. Bradford tops and crossbreds are quiet, and there is oetter inquiry for merinos. Sixty-fours, 51d; sixties, 46d; fifty-sixes, 34d; fifties, 29d forty-sixes, fortes, 20d. AUSTRALIAN "AUCTIONS ABAN DONED. MELBOURNE, May 8. At the conclusion of the conference be tween the woolgrowera and the selling brokers to discuss the question of the slump in the wool market, it was officially announced that it had been decided that public auctions forthwith cease, and be resumed on July 1 if the circumstances warrant it. Sir John Higgins in an interview <aid that if Bawra had been given the power it would have regulated the supply, ind thus prevented a slump occurring. He strongly urged the need of stabilising the industry. Asked if Bawra would undertake this, he said that if Bawra shareholders wished them iu take up the task again, and made such a recommendation, tne Australian board would have to eon suit the British hoard. It would mean that ho would probably have to make a hurried visit to London. GROWERS AND CONTROL. LONDON, May 7. The Yorkshire Post in an article entitled “Australian Growers and Control/’ said that the prophet of a wool famine is at a discount. Just now the problem is how to deal with the large accumulations, which are unlikely to be wanted for some months by which thne the new clips will be marketed in Australia, which will be calling for the re-establishment of Bawra. This is in marked contrast to the Australian attitude during the latter

half of 1922, when making allocations of the new wool to prevent over-hasty liquidation. Instead of this policy increasing their profits the Australian sellers let themselves in for a larger share of losses. Growers are now being made to realise for the first time since the war that wool is finding its true economic basis. The boom after the Armistice was artificial. There is now a not a famine, and the surplus is being earned, not by tho Government, but by private traders. Our importers are facing their losses with courage, without calling for outside assistance. The woolgrowers did exceedingly well for a long time, and have still a claim to special consideration. Now many who profited by the mad competition in wool at the end of 1924 call for the re-establishment of Bawra. This means that the Australian woolgrowers want to combine amongst themselves for carrying a large quantity of wool into next season, and arranging its liquidation with the new clip in 1925-26. That is their business. The slump has now gone so far that one cannot help concluding that Australians will be wise in not forcing the balance of the wool, still held in Australia, on the market at this moment. If they do so they will possibly create a panic, and play : nto the hands of speculators. Low water mark may not yet be touched, but any attempt at forced liquidation would mean severe depression in values, with subsequent violent reaction when orders for tops, yarns, and piece goods begin to be placed in a normal manner. AUSTRALIAN SALES ABANDONED. SYDNEY. May 9. The decision to abandon all the wool sales till July 1 has been received with consternation by the overseas shipping trade. It will have a serious effect on the export trade for the next few months. The chairman of the Overseas Shipping Representatives' Association said that the abandonment of the sales would inflict hardship on shipowners, who had already despatched ships from the other side of the world to take their places in tho loading berths for various sales. Their vessels could not find employment elsewhere. Apart from wool, there was no other profitable avenue of employment for shipping from Australia to the United Kingdom. The only other cargo is wheat, which has been reduced to a bedrock figure. HOLDING BACK OF SUPPLIES DEPRECATED. NEW YORK, May 10. The situation which has developed in tho world’s wool markets is interestingly reflected here, both as to actual market conditions and to comment in various quarters. Considerable attention is given to Mr J. M. Elder’s (Trade Commissioner for Australia) report to Mr 8 M. Bruce (Prime Minister of Australian which WiS recabled from Australia to the New York Times, and the opinion was expressed that the report probably touched upon the underlying psychological and social conditions affecting the wool trade in America.

The recent cancellation of colonial wool sales, and the peculiar situation of the London auctions, coupled with Monday’s cancellation of the sale at Brisbane, and today’s action of the Australian brokers and growers have developed somewhat pessimistic expressions in wool circles.

The New York Times's wool editor, in generally reviewing the situation, says that what was indicated a long time ago regarding wool sales is now generally conceded. This is that they cannot be maintained at anywhere near the high levels to which they were pushed by speculative interests last year. The editor comments that if the drop in prices at the recent auction sales, and tne withdrawals continue, there is bound to be talk about curtailing sales, or stopping them, until a better tone is noticed in the market. No one seems to be clamouring for wool, at least not at the prices which holders insist upon getting before parting with their supplies. The more wool that is kept from the sale the greater will be the available stock which will pile up, overhanging the market, and tending to depress prices. The wool consumption by the domestic American mills is not on a large scale. The amount used in March was 45,853,000 pounds of grease wool, or 2,000,000 less than in March, 1924. Tlie deficit would have been more but for an increase in the use of carpet wools.

The Boston commercial bulletin, commenting on the recently bemoaned instability, says the uncertainty that has overtaken the American wool market tends to predict even less satisfactory conditions, and by inference concludes that the Australian decisions concerning the sale of wool supplies are largely responsible for this state of affairs. Generally speaking, wool circles are finding fault with the holding back of supplies abroad, and asseverate the impossibility of the maintenance of high prices by witholding offerings. The happenings at the London auctions were freely predicted, and no surprise was expressed when the news came to hand that it had been discounted in advance.

The New York Journal of Commerce states that the selling factors insisted that they were not unduly frightened over the situation, because it was felt that wool had to come down. It can be said, generally speaking, that American interests want lower wool. Mr J. M. Elder gave the Australian Press Association the following comment on the wool situation. He said the methods applied to the selling of Australian vool are not different to the methods employed in respect of other countries, excepting insofar as the figures relating to the year’s clip are usually more accurate than" they are in the cause of the season’s export of butter or meat, or the year’s crop of wheat. The methods in regard to the sale of Australian wool are clean, scientific, and well regulated. Sellers who market when the auction is especially adverse, as it is in the case of wool, invariably curtail their offerings. It seems absurd to push the sale of wool when there is such a marked disinclination on the part of buyers to operate. The situation would be very different if the world’s requirements for wool were less than the productions, but the general statistical report shows this is not the case. Wool has had a spectacular rise, and is now suffering a spectacular drop. As sometimes happens when a crack starts it widens into a gulf, more because of the phychological effect rather than any sound reason. The cost of the manufacture of woollen goods in the United States has enormously increased, and to a very much larger extent than the rise in the price of raw wool, and for this and other reasons; such as are indicated in my report to Mr Bruce (Prime Minister), the demand for woollen goods has materially decreased, and many factories are already operating at less than a third of their full capacity. There is nothing new in the carry-over of one season’s wool to another, and the prospective carry-over of Australian wool, when compared with the world’s wool requirements, is relatively a small thing. Thus, while the Australian woolgrower can and does regulate the market for his produce, and thus secures the best prices, he must ultimately accept the price that the world can pay, He is not, and never can be, in a position to arbitrarily fix the price for his commodity. The recent increase in the price of Australian wool only represents a few shillings in the price of a suit of clothes; thus America must look elsewhere for reasons. Her wool trade is at the present in an unsatisfactory state. The world must be clothed, and wool must continue to be used in increasing quantities. It seems that there is no justification for undue pessimism. Wool 5s a commodity that has and will continue to suffer many fluctuations in the future. Such a course is inevitable, and is a coThmon world experience in all commodities used by the people.