THE WOOL OUTLOOK

Southland Times, Issue 18984, 19 November 1920, Page 5

THE WOOL OUTLOOK

SITUATION VERY UNCERTAIN. IMPERIAL GOVERNMENT HOLDINGS. STATEMENT OF POLICY WANTED. (Special to the Times.) WELLINGTON, November 18. The value of wool remains very uncertain. The brokers realise that any attempt to force sales would bring prices down to an even lower level than was recorded in Christchurch at the beginning of the week. The buyers do not wish to operate at all until the situation has developed to some extent, and any bids that they might make would be highly conservative in their estimate of wool values. The London prices cannot be regarded yet as established on any firm basis, and it is to London that the buyers must look for guidance.

The feeling among buyers and brokers is that the situation will remain highly unsatisfactory until some definite information regarding the policy of the British Government becomes available. The Direc-tor-General of Raw Materials is holding some 2,600,000 bales of Australian and New Zealand wool, and nobody knows how he proposes to handle this great accumulation. If he announced that he proposed to put his wool into the market quickly, then the brokers here undoubtedly would advise their clients to withhold their wool from sale, and take advantage of the provision that the Government is ready to make for the guaranteeing of bank advances on wool. The market would be crushed under the weight of the accumulated wool, and it would be hopeless to look for offers for the new clip at anything like reasonable prices. Any revival of the market is considered to be improbable while the accumulated wool hangs over it.

If on the other hand the Director-General of Raw Materials declared himself definitely to be a firm holder for a specified period, say eighteen months, the market would have a chance to recover its tone and an outlet could be found for a portion of the new dip.

The general opinion in the trade is that much of this year’s clip will have to be held in the Dominion in any case. This being so, the companies and the banks -will have to reach some sort of agreement as to the basis of value upon which advances are to be made. The values necessarily will be set low for this purpose, since the banks will require to assure themselves that when the wool is sold it will at the very least bring more thah the amount of the advance. The opinion has been expressed in Wellington that the tentative valuation will not exceed 5d or 6d per pound for coarse wool. It is hoped that the sales next month will go some way towards indicating' the market values for this country.