FUTURE OF WOOL

Southland Times, Issue 23816, 13 May 1939, Page 18

FUTURE OF WOOL

No Accumulation Of World Stocks GERMANY MUST BUY “In spite of the many pessimistic statements we hear about the future of wool,” said an English buyer to The. Sydney Morning Herald, “the fact that we are going on buying steadily and that the market has remained on a consistent level for many months now is definitely reassuring. “Prices may not be on an all round remunerative basis for producers.” he said, “but that condition applies equally to cotton, silk, metals and other primaries, so that it is no use singling out wool and saying that it is specially hard hit. ''“As a matter of fact, added this buyer, “I am inclined to the view that, in all the circumstances, Australian growers are fortunate, because they are receiving 25 per cent, more than the gold value of their clip, and are having no difficulty in selling all they can produce. “The best augury for the future of the staple is this very fact that no amount of wool is accumulating anywhere in Australia—or in any other producing country for that matter —so that, when the tide turns, as it must do some day, growers will reap the immediate benefit of rising values.” freer trade “But what is likely to influence this turn of tide?” the buyer was asked. “Freer trade,” was his reply; “although,” he added, “it is very difficult to see how anything approaching freedom can be expected under existing international conditions. Yet we all know that the present position cannot be maintained too long,” he continued, “and that the people in the countries that are being denied their quota of woollen clothing today will not cease to demand it until the barriers keeping it from them are broken down. “War, also would tend to force values up to some extent, but it is [fairly obvious from an examination of the import and export figures in Europe that none of the nations liable to be involved in hostilities would go short of wool for some considerable time. They have been slowly building up reserves,” said this buyer, “and. if the worst came to the worst, those nations that could not import wool would be forced to depend more and more on substitutes.”

' Another trade authority in Sydney poinlcd out that, although Germanv anrl

all the countries now under its control are buying only under licence, they cannot possibly do without wool. Where they buy it may be important, but not so vitally important as the fact that they are continuing to lift big quantities from the world’s market. This season, for instance, they purchased nearly 70,000,0001 b from South Africa between July and the end of February. Of the Argentine clip they took over 17,000,0001 b between October and February and from Uruguay their purchases in the same period were just on 16,000,0001 b. “These are the countries with which they have barter agreements,” said this authority, “and, whether we approve these or not,, the fact remains that Germany wants all the wool it can possibly buy. If its buyers could establish credits here, they would take a good deal more of the Australian clip. When they do operate they know what they want, and bid strongly for it, so that their competition is always valuable.” LOST TRADE “If Germany is thus losing trade, is any other country gaining it?” he was asked. “For the time being a good deal of it is, being lost,” was the reply, “because no country today can afford to buy on the scale of even two years ago. England also has lost heavily in her export cloth trade, but it is obvious, judging by her heavy imports of raw wool from Australia and New Zealand, that her internal trade has grown,” added this authority. “No doubt this is due mainly to the cheapness of wool; indeed, it is sale to conclude that low values have been the one factor that has enabled the world to absorb all the wool produced in recent years. A substantial rise in prices would give substitutes an opportunity now denied them, which would seem to indicate that, if they are to continue to dispose of all their wool, growers will have to wait for a rise in the value of other primary commodities before they can expect any appreciable increase in raw wool prices.