The Timaru Herald. TUESDAY, DECEMBER 3, 1935 THE WOOL OUTLOOK.

Timaru Herald, Volume CXL, Issue 20281, 3 December 1935, Page 8

The Timaru Herald. TUESDAY, DECEMBER 3, 1935 THE WOOL OUTLOOK.

One of the “pieces of luck” that has befallen the Labour Party as it enters into office as the Government of the day, is the favourable' outlook for wool. The Auckland sale brought new hope through bigger cheques into the pastoral industry, and incidentally made it tolerably safe to say that if Labour's plan for guaranteed prices came into operation, Mr Savage and his colleagues would find the wool-grower adequately provided for through the very much improved level of prices. The Napier sale held yesterday confirmed the favourable trend shown at Auckland. One interesting aspect of the guaranteed price plan is that growers of wool, once Labour’s plan became operative, would have no claim to share in the bigger cheques drawn from the wool sales, where the price levels advance above the average determined by the Labour Government, prices which would remain in the vicinity of 1/- per lb. for medium crossbred 44’s/4C’s, good to super crossbred wool. In a word, once a system of guaranteed prices is introduced, the grower will no longer be financially interested in higher price levels. At the moment, however, the pastoralists are more interested in the trend of the wool sales than in the prospects of an early change in the system of distribution. The fact that consumption in Europe, in the East, and in South America continues to increase is giving new' heart to the wool-growing industry; indeed, the people of the Dominion have become so well-acquaint-ed with the national iinportanpe of the primary industries, that much interest is manifested in the trend of the wool market. The increased demand for wool has been generally anticipated. Reports from Bradford suggest that “topmakers are so well sold that they are now more concerned about securing adequate supplies of new wool at a reasonable price, than they are about further business in tops”: The consumption of wool in the United Kingdom continues to increase and crossbreds are sharing more and more in the improvement. It is estimated that during the twelve months to the end of September, the consumption of wool in the United Kingdom exceeded net imports by about 70,000,0001 b. One indication of the improved conditions is the official return of wages paid in the woollen and worsted industry. In the worsted section the index number of wages paid at the end of September was the highest since January, 1934, and in the woollen section it was the highest since October, 1933.

It is interesting to mention, in view of the rapid recovery of trade and industry in Britain, that the expansion of trade in the manufactured wool has been mainly in the home trade. It is known, however, that stocks are so light in Germany, for instance, that that country has been attempting to arrange for the purchase of wool on the barter system, while other countries are definitely in the market for the purchase of wool. But if the Homeland has been steadily increasing its home sales of manufactured wool, the demand for British products in foreign countries is showing a steady increase:

The best feature of the export trade this year has been the big increase in the shipments of tops, mainly crossbreds, to the Continent and to Canada. For the nine months to the end of September, the exports of tops have amounted to 41,000,0001 b., as compared with 31,000,0001 b. for the corresponding period of last year, and 34,000,0001 b. for the corresponding period of 1933. So far as fully-manufactured goods are concerned, 'taking woollens and worsteds together, the exports this year have been about 83,000,000 square yards, as compared with 79,000,000 square yards last year, and 71,000,000 square yards in 1933.

Higher price levels for wool invariably create renewed confidence in the return of better times, and the favourable trend of the market and the obviously sound grounds for the turn of the market in favour of the grower will be reflected in the greatly improved internal trade of the Dominion. THE TREND OF TRADE. One of the most intricate problems confronting the new Administration that will take over the reins of office this week, is the Labour Party’s attitude to exchange, in relation to internal policy and oversea trading. Mr Downie Stewart has repeatedly explained that New Zealand is “treed” on the exchange question and it may he better to postpone the attempt to “climb down” until the great financial powers, Britain, America and France, can agree upon currency stabilisation. The Dominion could then settle on a basis more likely to prove stable and permanent. In any case, to lower the exchange rate ahead of our market rivals—Australia, Denmark and Argentina—would prejudice the producers in competition with them. Moreover, it is timely to note New Zealand’s steady and continuous increase of imports. This is again the main feature of the oversea trade returns for the ten months ending October 31. Exports during October showed a substantial improvement over those of October, 1934, the figures being £2,846,000 and £2,057,000 an increase of £789,000. This increase

is clue to the Improved prices ruling for dairy produce this season. Imports are shown at £3,603,000, an increase of £206,000 on those for October, 1934, while compared with October, 1933, there is an increase of no less than £1,358,000. The position of October trade for the last three years is shown in the following comparative table: Month of Exports. Imports. £ £ Oct., 1935 .. 2,846,000 3,603,000 Oct., 1934 .. 2,057,000 3,397,000 Oct., 1933 .. 2,379,000 2,245,000 For the ten months ended October 31, exports are valued at £38,739,000, a decline of £3,195,000 compared with those for the corresponding period of last year, mainly due to lower wool prices, hut are £4,817,000 above those of the same period of 1933. The marked improvement in the import trade is shown by a total of £30,059,000 for the ten months, an advance of £4,26,000 on the value of imports for the corresponding period of last year, and no less than £8,821,000 ahead of the total for the ten months of 1933. The growth of imports and the lower export values have reduced the visible balance for the ten months to £8,680,000, a decline of £7,471,000, compared with that of 12 months ago. The position in relation to the trade balance can be seen from the following table:

Ten months Exports. Imports. ended £ £ Oct., 1935 .. 38,739,000 30,059,000 Oct., 1934 .. 41,934,000 25,783,000 Oct., 1933 .. 33,922,000 21,238,000 With all its commendable intentions to restore the internal economy of the country to comfortable stability, the new Government will be compelled to keep its “weather eye” on the trend of New Zealand’s oversea trade because, of the substantial commitments that have to be met in interest payments on the oversea indebtedness of the State and numerous local governing bodies. PROFIT OF £42,161 CANTERBURY FROZEN MEAT COMPANY By Telegraph—Press Association CHRISTCHURCH, December 2. The annual report of the Canterbury Frozen Meat and Dairy Produce Export Company, Ltd., for the year ended November 30 has been circulated. The net profit for the year, after provision for depreciation, is £42,161/6/9 which, with the amount brought forward, makes the amount :w credit of the profit and loss account £50,063/19/2. Out of this £IO,OOO has been added to the general reserve and £20,000 to the renewals reserve fund, leaving the sum of £20,063/19/2, which the directors recommend be dealt with as follows: £ Dividend of 5 per cent on preference shares .. .. 5000 0 0 Dividend of 7 per cent on ordinary shares .. .. 7875 0 0 Carry forward 7189 9 2 The retiring directors, Messrs Herbert Elworthy and Gordon Fulton, offer themselves for re-election.