OUTLOOK FOR WOOL.

Timaru Herald, Volume CXXV, Issue 18599, 21 June 1930, Page 21 (Supplement)

OUTLOOK FOR WOOL.

EFFECT OF LOWER PRICES. (Bpeclal to the "Herald.”) WELLINGTON, June 20. One of the most interesting features of the address delivered at the annual meeting of the shareholders of the Bank of New Zealand to-day, by the chairman of directors (Sir George Elliot), dealt with the wool outlook. “The past year has been noteworthy because of the fall In the prices received for our wool. In advancing reasons for this state of things, change of fashion in clothing, the discarding to a large extent of woollen underwear, the introduction in recent years of artificial silk, together with the great increase in production that has taken place in. wool-producing countries, are all factors that must be kept in mind. The world production of Rayon, or artificial silk, was estimated by the "Silk Journal and Rayon Weekly” to be 412,000,0001b5. In 1929, as against 345,000,0001b5. in 1928. These are large figures for a product which not so many years ago was practically unknown on a commercial scale, and amount to very nearly twice the weight of this Dominion's annual wool clip. Almost the whole output of Rayon has been used for the purposes for which wool, cotton" and pure silk were previously used. -Vet the world production of wool has not remained constant but has steadily increased. “As compared with the average prewar year, last year’s world production has Increased nearly 20 per cent. The Government Statistician has been good enough to supply his estimate of our wool clip for this last season. It amounts to -245,000,000 pounds, and compares with preceding seasons as follows: Season 1927 ~ .. 226,032,0001b5. 1928 .. .. 234,259,0001b5. 1929 .. -. 243,056,0001b5. “In connection with these figures, the Year Book states that no addition has been made for wool on sheep-skins exported, nor for loss in scouring or washing... If these were added, the weight of New Zealand's production for 1929 would probably total 260 million pounds. Russia, a purchaser of wool in tjie past, is making every effort to become a self-contained unit, and large numbers of stud sheep have been imported from Australia for the purposes of building up national flocks. The Bank or Russian Trade in its "Review” for March, 1930, makes the following comment:—‘lt is anticipated that the shortage of woollen cloths which has been experienced in the Soviet Union since the war will exist to a much smaller extent at,' the end of the fiveyear period covered by the plan, but imports of wool will still continue since the. measures taken for the increase of sheep-raising will not produce their full effect until some years after 1933.’ If the expectations of the Soviet Government are realised, then Russia will annually become a smaller purchaser of wool and eventually will cease to be a purchaser altogether.

“From a Dominion point of view it is fortunate that the fall in the price of wool has been offset to some extent by increased production. Some of our growers, considering that the present depression is more or less temporary, have held their clips and propose selling when prices improve. Time alone will prove the wisdom or otherwise of such a policy. If wool growers are facing a cycle of falling markets, the holding over of wool to next season may accentuate the possibility of a further fall, assuming that next year’s world clip is as large as this year’s. In other countries substantial quantities of wool are unsold. The Bank of London and South America, Ltd., writing in March, stated that there were 9,000 tons of unsold wool In the central market at Buenos Aires, as against 4,000 tons at the same date in the previous year. Their Bahia Blanca branch stated at the same date, ‘Present stock Is said to be 2,114,873 kilos as against 416,318 kilos at this time last year.’ Other branches of the same Bank report similarly. The Monte Video (Uruguay) Branch stated that the total clip was approximately 145,000 bales, Of which 107,000 were unsold. During the last few weeks prices have improved. To what extent this is due tp a temporary shortage in the consuming countries it is not possible to say. It may be that prices reached rock bottom in January and February —time alone will tell.