THE RISE IN BUTTER

Wanganui Chronicle, Volume LXXVI, Issue 18531, 13 July 1922, Page 8

THE RISE IN BUTTER

RESULT OF SHORTAGE

MR. GOODFELLOW’S VIEWS. PRICES ON LOCAL MARKET. His views upon the present position ot the butter market were given by Mr W. Goodfellow, managing director of the New Zealand Co-opera-tive Dairy Company, Ltd., in the course o£ an interview on Wednesday with the Hamilton correspondent of the New Zealand Herald. Mr Goodfellow stated that from recent cablegrams received from Mr J. B. Wright, the company’s London manager, "Anchor” butter was now selling at 235/-, with a probable further advance in the near future. The advance in price was due to a sbortage crea»-d by drought conditions, but apart from this it was quite evident to those in close touch with the export market that there would be a substantial increase in the London price of butter during the British autumn owing to the amount of butter now produced in the northern hemisphere not being sufficient to meet the requiremets of the British consumer. "Producers must not lose sight of the fact,” continued Mr Goodfellow, "that approximately one-half of the total production of dairy produce in New' Zealand is manufactured during November, December, and January; it is therefore the value of butter in London during January, February, March and April of each year that largely determines the average pay out for the season. If Australia and New Zealand during the coming season export anything like the suantrty of butter that has been shipped during the past year there will unquestionably be a very considerable weakening iiy values as the season advances, and, in fact, if nothing unforeseen occurs, it is quite probable that there will be a repetition of last season’s slump about January, only of course to a much lesser degree. The producers in this country apparently have failed to realise the fact that the highest prices in Great Britain for the next year or two are likely to be paid during the British summer, rather than the British winter. As in the past the postion will be gradually correct itself by curtailment of winter production in the nortehern hemisphere and the stimulation of winter production in the southern hemisphere. In short, the markets of the world have been completely reversed of recent years. Exports from New Zealand require regulating in order to obtain maximum returns.” OVER-OPTIMISM DEPRECATED. In conclusion, Mr Goodfellow stated that suppliers should not be too optimistic at this juncture. All the dairy companies, apart from the New Zealand Co-operative Dairy Company, and possibly a few others, had already disposed of the whole ot their autumn and winter butter for export to London, and. local buyers at prices ranging from 1/2 J to 1/5 f.0.b., so that the additional profit now obtainable would largely g’avitate into ,the pockets of the speculators. As far as the New Zealand Dairy Company was concerned, approximately 2 5 per cent, of the total season’s exports of butter and 35 per cent, of the cheese was yet unsold, and the recent increase of values would be reflected in a substantial increase in the bonus payments. The South Auckland Dairy Association had recently reviewed the position, and had decided to recommend the associated companies to advance 1/7 per pound butter-fat for June and July. THE PROPOSED COMMITTEE. Dealing with the local market, Mr Goodfellow stated that negotiations were preceding for the formation of an Auckland Producers’ Butter Committee, with the object of fixing from time to time the wholesale price of butter. It had been decided to advance the price of butter Id per lb. on June 26, and to make a further advance of 2d per lb. on June 29. The present London quotation was not the f.o.b. value, aud it was a mistake to be guided entitrely by London quotations. “It must always be remembered that to-day’s London quotations represents the value of butter exported from this country several months ago. In determining the value of butter on the local market the factories had to decide' what would be the f.o.b. value—in other words, what would the butter be worth if it arrived on the London market in two or four months hence.” SELLING FORWARD.

One of the greatest difficulties in regualting the price of butter on the local market was caused by small factories selling forward at low prices during March, April, and May. During this season a number of companies had disposed of their autumn make at as low a price as 1/2J. The result was that merchants and retailers who had purchased this butter could now afford to sell it at a profit at 1/6 per lb. and in some cases this was actually being done. It would be Impossible to put the Auckland City butter business on a satisfactory basis from a producers’ point of view, concluded Mr Goodfellow, until the North Auckland factories ceased making forward sales of butter for local consumption.