FACTORS UPSETTING THE WOOL MARKET

Timaru Herald, Volume CXLIII, Issue 20897, 29 November 1937, Page 8

FACTORS UPSETTING THE WOOL MARKET

New Zealand pastoralists and all who realise the intimate relationship between oversea price levels and the Dominion’s economic stability have awaited with no little anxiety the opening of the wool-selling season in New Zealand. The trend of the London market prepared wool producers in New Zealand, Australia and South Africa for an easing of the market during the 1937-38 wool season, while the uncertain attitude of Japan, because of difficulties created by the undeclared war in the Orient, seemed to suggest that one of the factors that influenced the wool market at the closing sales of last season, would be absent at least during the earlier sales this year. Moreover, exchange difficulties confronting some wool-consuming countries seem to have eliminated, for the time being at least, those competitors who came late into the market from several important consuming centres. It is realised, of course, that large quantities of New Zealand and Australian wool have always been purchased by English wool-broking firms, on commission for important textile interests in Europe, but in the opening sale in Auckland on Saturday there seems to have been little demand from that section of buyers. It will be remembered, overover, that leading political, banking and manufacturing authorities have from time to time warned the producing countries that they should not allow themselves to cherish the false illusion that peak prices for wool would be paid indefinitely by consuming countries. But perhaps the biggest factor in producing the unfavourable market conditions in the wool-selling world is fears of an international explosion and loss of confidence in community and share markets. As recently as last Friday, Sir Thomas Buckland, president of the Bank of New South Wales, speaking in Sydney, issued a warning to producing centres, to look the international situation in the face; indeed, he counselled the utmost caution:

“The outlook for the current season seems generally satisfactory, but there have been some rather sharp falls in recent months In some of our most Important primary products. This drop is quite serious enough to cause some uneasiness, even though it Is due rather to the disturbed world situation than to any basic unsoundness in the marketing position.”

It is significant that this nervousness communicated itself to both buyers and sellers at the opening of the Auckland sale; indeed, one of the veterans of the woolselling business confessed that “in a lifetime of woolselling, I have never faced such an ordeal.” One explanation for the substantial fall in the price level of New Zealand wool would seem to be found In the lack of confidence born of the gravity of the European situation and the absence from the sale (whether retaliatory or not, cannot be determined) of groups of buyers who were “on their toes” as it were, at the concluding sales last year when prices soared to dangerously high levels. The comforting aspect Of the wool outlook at the moment, in spite of the fall in price levels, is that the world’s need for wool has not been lessened, neither has the production of this essential stable commodity outstripped the normal demands of consuming countries.