SPECULATION IN WOOL.

Taranaki Daily News, 20 June 1925, Page 12

SPECULATION IN WOOL.

CAUSE OF HIGH PRICES. ARTIFICIAL SILK INDUSTRY. EFFECT IN WOOL MARKET PAST SEASON REVIEWED. By Telefiranftr. —'Press Association. Wellington. June 19. The opinion that the phenomenal rise in wool values at the early sales of the season was due to speculation was expressed by Sir George Elliot, chairman of the Bank of New Zealand, who, after dealing with the wool situation in his address at the annual meeting of shareholders in the bank, went on to refer to the effect of the artificial silk industry on the wool market. Sir George Elliot said: The sales opened in November last with a sensational rise in the prices for all classes of wool. In the North Island the average price, paid per bale worked out at about £44, and it was correspondingly higher for the finer classes of wool in the South Island. It was afterwards quite apparent that these November-December prices were not justified, for, at the following North Island sales, the average dropped to £25 per bale, and again from that to £l9 per bale. Nevertheless, the average price for the whole of Now Zealand will probably work out at about £29 per bale for the season. A comparison of this price with that of the 1913-14 season, viz., £l2 17-s 4d, gives a ready indication of the wonderful year this has been for the New Zealand sheepfarmer.

One can only hazard a guess at the reasons that led up to the phenomenal rise that took place ot the early sales. For some considerable time Sir Arthur Goldfinch, the chairman of the BritishAustralasian Wool Realisation Association. has maintained that the annual output of wool was wholly inadequate to supply the growing demand for woollen goods throughout the. world, and the figures he submits do not seem to have been controverted. His statements no doubt affected prices, but there were other and weightier factors. One was the difficulty,that was being experienced in transferring money from London to pay for purchases both in Australia and ‘New Zealand, and more especially in Australia. In November and December of last year the exchange difficulty in Australia was so acute that grave doubts were expressed as to the ability of the banks to finance the exports. This difficulty ’was eccentuated by an exceptionally heavy wool clip and rising prices. It is interesting to note in passing that, owing to a bounteous season, the average weight of wool per sheep Australia was B%Ub, as compared with 7%1b the previous year. THE TREND OF PRICES. Z With these possible Australian exchange difficulties in mind, buyers who had arranged for credits in New Zealand became more inclined to bid wool up to a price not warranted by the conditions of trade ruling in Great Britain and on the Continent of Europe. In my opinion, however, the chief reason for the phenomenal rise I have been speaking of. is to be found in an excessive amount of speculation, no doubt encouraged by the continuous rising trend of prices during the previous two years. The result of this speculation has been disastrous to the buyers; certainly New Zealand sheep farmers have gained, but buyers from overseas and speculators in New Zealand have lost, and such a state of affairs is far from desirable.

The number of sheep in New Zealand in 1914 was 24,595,405, as against 23,584,789 for 1924. The figures for 1925 are not yet available, but it is estimated there may be an increase on the 1924 numbers. The total wool shipped in the 1913-1914 season was 560,887 bales, and for the nine months ended March 31 last 454,0712 bales had been exported. Owing to the drop in prices during the latter end of the season, a percentage was held over at the sales, and is still in the brokers’ stores.

The following table shows the trend of prices realised at various centres during November, December, January and February of this year:

SALE IN LONDON. While prices at the opening of the May sale in London were disappointing, tlie sale -closed active with keen competiotion for wools. Continental buyers were the principal operators in merinos. The home trade demand was principally for crossbreds. There were •60,000 bales catalogued and 43.000 sold —24,000 to the Continent, I’B,ooo Home trade, 1,000 to America. There were then still 115,000 'bales in store.

The following prices were realised; — Crossbreds, fine 17d to lOd per lb, medium 14 3 z ;,d to Kid, coarse 13 %d to 14 %d; half b reds, 20d to 23d; merinos, <super 27 d to 29a, ordinary 25d to 26d. If 2fd per lb is deducted from the London prices for expenses of chipping and other incidental charges, these -figures will show the value of the various classes of wool in New Zealand, In connection with wool values, it must be remembered that the production of artificial silk, which was in its infancy 12 or 15 years ago, has been making increasingly rapid strides during the past few years, It is estimated that the weight of the world’s output of this material last year was 120 million lbs., and it is expected to reach 1’55

million lbs this year. Artificial silk is a product of wood pulp, which is cheap and plentiful. Articles made from it have a beautiful finish, dye admirably, and wear moderately well. It was used originally for braid making and later for hosiery. During the past few years, however, the use of artificial silk has extended remarkably, and this material is now being used in numerous ways,either by itself or in conjunction with -silk, wool and cotton. Large sums are invested in the industry, and capital issues for new concerns and for comparatively old-established businesses are o*f frequent occurrence. While artificial silk is having some effect on the consumption of wool, it will probably in the future have a greater effect on fine cottons, and its continued use will, to some extent, tend to steady the market for both wool and

cotton. As long, however, as the price of wool and woollen goods is maintained at a. fair level to the woo]-grower, to the manufacturer, and to the public, neither artificial .silk nor any other substitute so far discovered can take its place.

When the wool commandeer was arranged with the British Government during the war, the price was considered excellent by the great majority of sheepfarmers, and at present, according to the latest London advices, the market value of wool is approximating the commandeer price. Any sheep farmer who has not paid an exorbitant price for his land should, on present wool values, be able to do exceedingly well.

Nov. d. y Doe. d. Jan. d. Feb. d. Auckland —■ 23.5 — 17.00 Wellington 23.34 -21.44 21.3® 17.11 Napier 23.6 02.38 20.78 10.88 Wanganui 22.83 —. 20.80 16.39 Christchurch 27.2 — 24.99 19.08 Timaru — “28.12 19.43 —. Dunedin — 23.38 -22.47 — Invercargill — — 20.32 —