WELLINGTON TOPICS.

Taranaki Daily News, 12 May 1925, Page 5

WELLINGTON TOPICS.

THE SLUMP IN WOOL. (♦Spacial Co rreapo ndent.) Wellington, May 8. The London wool eales which opened on Tuesday last leave no room for doubt as to the slump in wool. All ’crossbred sorts are 6d per l ; b lower than at the March sales. This coming upon 'previous declines makes the position a very serious one. During 19z4 we exported about 560,000 bales, and the export value was assessed at £15,000,000. The fall in values since December has been much more than 6d, but assuming that it is not any more, this means writing off at least £8 per bale or approximately four and a half millions sterling, a loss that we cannot afford. It is perhaps not correct to refer to it as a loss, but it means that the next clip will realise so much less and the effects must be far-reaching. The sheep farmers will have les>s to spend, there will be less for income tax, and so the effects will penetrate to every strata of society. The serious drop in wool will also affect the price of sheep and lambs, so that it is not a very pleasant prospect. Opinions are at variance as to the immediate future. The Australian wool brokers evidently think that the wool market will recover later on and have therefore abandoned the sales intended to be held this month. Some Welling’ton woolbrokers ido not entertain any such optimistic opinion. The Australian growers and others are no doubt basing their views on the statistics which huve been from time to time published by Sir Arthur Goldfinch, the well-known authority, but statistics have no value against the limited purchasing power of the masses. When it comes to statistics and finance the latter must win. It is of little use saying that wool is worth so much when those who ought to buy the wool and who want it are unable to pay the price. What has happened in the wool trade in the past few months is that a struggle has been going on between those who pinned their faith to the statistical position as a guide, but they soon discovered that the consumers could not pay the high prices demanded, and wool was regarded as a luxury. Artificial silk, or “rayon,” as it is now known, is being extensively used and will take a lot of killing. Manufactured and partly manufactured goods began to accumulate, and clothmakers ’bought sparingly of yarns, spinners* did the same in respect to tops, and now it has come back to the combers who have struck against the high prices for the raw material.

THE WOOL PROSPECTS. What are the prospects of wool? A good many think that there will be a recovery in September, and wool is being held for the London September sales. One wool broker sums tip the position as follows:—A fair amount of scouring wool bought in New Zealand is yet to go Home; the meat companies’ slipe and other wools is yet to be shipped; and of the difference between wool offered and wool sold in the New Zealand auctions during the past season some 40,000 bales remain in owners’ hands. This, too, has to be disposed of; so will a fair amount of fleece wool in small lots that ordinarily come into the sale of crunchings in June and July, lif the market is not better than it is now then a lot of the wool will be held over, or shipped to London for sale. With what result? Well, just think of the accumulations of wool unsold arising from (1) the holding back of the Australian clip; (2) the withdrawals from the London May sales; (3) the wool now withheld from sale in Australia and New Zealand; the existence of the unsold, unshipped scoured and slipe wool still in New Zealand. The current London sales will not last a week if the market does not show some recovery, for the withdrawals will be extremely heavv. This carryover will go into the July sales, and as the European and North American clips will then be available there will be little hope of values improving, and there is certain to be a heavy carry-over from the July to the September London sales. By September a fair amount of the new Australian clips will be in store and the New Zealand clip will be in sight. Australia has had a remarkably fine season, and it is anticipated that with the increase in the flocks the clip will turn out 200,000 bales more than in the past season, and the New Zealand clip is expected to show an increase of 60,000 bales. - Increases may also be expected from other producing countries. We have thus accumulations of old wool and increase in the new clips, but there is no prospect of the purchasing power of consumers being any better. There is nothing to encourage the belief that consumers are able to pay fancy prices for wool fabrics. The trade has suffered from an overdose of optimism, and it is probable that it will suffer from an overdose of pessimism before the right balance is struck. Just at whafr point prices will show stability it is difficult to say, but that point must soon be reached, for the great textile industry cannot be hung up indefinitely.