TOO BIG A DROP

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

TOO BIG A DROP

EXPLANATION HARD TO SEEK The huge drop in prices at the opening wool sale of the season in Auckland on Saturday has come as a great shock to growers and members of the trade in this district, and doubtless the same feeling exists right throughout the Dominion. It was generally anticipated that prices during the season just opening would show a drop of from 15 to 20 per cent, on those ruling at the latter end of last season, for there were factors operating at that time which forced the market higher than it should have gone. In addition to that, Japan, which was one of the chief operators, last season, and whose elastic limits forced Bradford and other operators to extend in order to secure their requirements, has since come into conflict with China, and the uncertainty of the American Stock Exchange are advanced as the chief reasons for the senstional drop in prices at Auckland. A representative of “The Tiinaru Herald” yesterday conferred with several persons interested in the wool industry, and without exception they were at a loss to account for the market dropping to the reported extent of 40 per cent. “Even allowing for the Eastern situation and the uncertainty of the American exchange,” said one man, "it is apparent that there were very few orders to be filled. It is possible that the bench at Auckland would have taken the whole clip, but at their own prices, and growers, in the light of existing conditions in this country, were not prepared to meet the market. With Japan and the United States not operating, the Bradford representatives had the field practically to themselves, and from what I can see, had it not been for one or two Continental operators and Dominion mills, the auction would have been disastrous. It would appear that some clips changed hands privately, and some encouragement may be derived from this, but what the future holds ip store is difficult to state.”

The speaker pointed out that if Bradford had the Dominion market to itself, and found that growers were not prepared to sell, then the limits might have to be extended in order to fill the orders which were on hand. The Auckland sale in the past had been accepted as a reliable guide for the New Zealand season, for a new clip was being offered as against last season’s wool Which came on the London market at this time of the year. Really the New, Zealand clip at Auckland should have sold at a premium on London, but the Auckland prices were much below London parity, and that was what made the situation so difficult to understand. "We all expected to see a drop,” he said, “but the sale has been a real staggerer.” Grower’s Viewpoint A prominent South Canterbury woolgrower said that the sale was disastrous, and if prices did not improve, then he considered that the country was heading for a worse slump than the last one. “Costs of production have gone up enormously,” he said, “and Auckland growers could not be blamed for not accepting the prices offered. As far as we could make out, the wool consuming countries were running practically on bare boards, and there seemed to be every indication that our wool would be wanted. We realised that we could not expect last season’s prices, which were to some extent false, but a drop of 40 per cent—well, it is just too much.” The speaker said that many growers had become apprehensive regarding wool when they saw how prices for .skins had dropped, there being practically no demand at the last sale, in Timaru. This was a bad omen, but just how bad it was they were now just beginning to realise. The London market had closed fairly firm, and the Australian market was firm, and there did not seem to be anything to warrant the big drop at Auckland. No Need For Panic The view that there was no cause for panic was advanced by a member of the trade, who blamed the Wall Street collapse for the present poeltlon. “The drop is too severe altogether," he said, and in my opinion the wool situation will soon steady up.” The speaker said that it was difficult sometimes to read the London market, because It was not always possible to know what the comparison was. At the closing sale

the market went back 15 per cent, but one did not know what that was compared with. The whole thing was governed by the world position, and he was convinced that the position would level out, and that the drop would not be nearly so disastrous.” Official Report The official report states that there was an offering of 25,000 bales. Approximately 30 to 35 per cent was sold at auction, competition being fair within restricted limits. The Continent was thfe principal buyer with Dominion mills competing for super halfbred lines. Hogget wools were shorter and finer than usual being thus particularly suitable for Continental requirements but did not command the usual premium. The sale proved better than brokers had first anticipated due to the operations of Continental buyers. Compared with last season's opening sale, prices generally show a reduction of about 40 per cent, although some lines show a still greater drop. Tile range of prices was as follows the November 1936 prices being shown for purposes of comparison:—

Southdown— A B 1937. d. d. 11 to 12 93 to 10* 1936. d. d. 191 to 201 161 to 19 Half bred, 56-58— Extra super .. 15 to 16 — Super .. .. — to 15 23 4 to 26 Average .... 13 to 144 19 to 23 Halfbred, 50-56— Super 13 to 14 17 to 18i Average .. .. lli to 12i 15 to 162 Inferior .. .. 10 toll — Extra fine crossbred, 48-50— Super .. .. 11 to 12 16* to 18 Average .. .. 10i toll 15 to 164 Inferior .. .. 9 to 10 — Fine crossbred, 46-48— Super io; to 103 16 to 17 Average .. .. 9J to 10 14* to 153 Inferior .. .. 8 to 9 — Medium crossbred, 44-46— Super 10 to 10* 16 to 17 Average .. .. 9 to 93 131 to 154 Inferior .. .. 8 to 9 — Coarse Crossbred, 40-44— Super 10 tolOi 15 to 16 Average .. .. 91 to 93 13i to 143 Inferior .. .. 84 to 9 — Strong crossbred, 6-40— Super 10 tolOi 14 to 15 Average .. .. 91 to 93 123 to 133 Inferior .. .. 8i to 9 — Hoggets— 52-56 11 toll! — 50-56 10 toll 17 J to 201 48-50 91 to 104 154 to 17 46-48 91 to 101 14 to 16 Lambs— • Down crossbred —- 12 to 134 Fine —- 14 to 15i Medium .. .. 123 to 131 Seedy and inf. — 6 to 10 Bellies and Pieces— Crossbred— Good to super 74 to 81 11 to 124 Low to medium 6 to 71 9 to 104 Halfbred .. .. 8 to 91 15 to 17 Crutchlngs— Medium to good 7 to 9 11 to 121 Inf. to seedy .. 5 to 61 94 to 11 Locks— Crossbred .. .. 41 to 53 6 to 81