A SILVER LINING

Gisborne Times, Volume XXVI, Issue 2203, 29 May 1908, Page 2

A SILVER LINING

Tho latest. news from London regarding tho condition- of the wool market contains the first decided incation that the downward tendency of prices has at last- touched bottom. For months cable advices have told tho same gloomy tale of depressed markets, lack of competition, and falling prices. Months ago it was thought by those who study these matters and who may reasonably bo expected to know all there is to learn concerning tlio wool trade that values had reached bed-rock, yet each succeeding report would tell of still more rebuffs for the pastoral industry. A fortnight ago the first change for the better was noted, when Bradford -advices told, -not of higher prices, but- of keener competition, and during the present week we hear of a 20 per cent, rise in crossbreds as compared with the rates ruling a few days previously. It would not, of course, do to attach too much importance to the good news that has just -come to hand,' for one sale does not make a market, nor do the operations of one day at a London wool salo set a permanent standard of prices. There is, however, strong ground for believing that the demand at Home for woollen goods is again setting in, and that manufacturers have, in consequence, been compelled to again enter the market as buyers. Once the tide turns it will not take long for wool buyers to again have confidence in the market, and the prices may be expected to show a steady but certain rise, although the very high- level that was ruling eight months ago is not likely to bo reached for some considerable time to come. It is, in fact, generally conceded that it is better for the trade that rates should not reach a level looked- upon as abnormal, for once wool gets beyond a certain price there is always a danger that consumers will be unable to face the high price of woollen goods, and that the demand will in consequence be reduced; A fortnight ago the leading pastoralist authority in Australasia, the “Pastoralists’ Review,” dealt very fully with the position, and its. summing up of the causes which led to the recent slump and the prospects of a revival make very interesting reading. According to the “Review,” the collapse in values is attributable to—1. Financial crisis in America 6ix months -ago, and consequent dearness of money throughout the world. 2. General upsetting of trade following the crisis referred to. ' 3. An awakening to the- fact that most countries, and more especially Germany and U.S.A., had been overtrading for some years. 4. Decrease in production of cereals and poor outlook for crops generally -speaking. 5. Decline in tho value of crude metals, tfhd last, but not least, the advantage taken by the “bears” of the foregoing facts, all of which have assisted them to force the market down to what we maintain is an unnatural level, !

Looking at the ether side of the picture, and in support of those who held that values must soon recover at least some of their lost ground, it is Seen —

1. That stocks were absolutely bare six months ago.

2. That the world’s production of wool for tho year shows a fairly substantial .reduction, w-licrcase the population continues to increase.

3. There is almost suro to be a further shrinkage in the output of wool during the coining year. 4. Money is on the average fairly cheap '(very chonp in Great Britain). 5. The past cotton crop (and cotton, is wool’s most serious competitor) shows a very heavy decrease as compared with the preceding year. 6. Current values are substantially below the average of the past twenty years.

“It would really appear,” adds the “Review,” “as though production counted for little when trade is really bad, for at the present time, in face of lessened production and the fact that low values should help to stimulate consumption, stocks of wool are accumulating, and it appears tolerably certain that there will ho no material recovery in the market until trade improves. When trade does improve tho accumulation of stocks now manifest will soon disappear, and values will be on the up grade. Some think that when prices begin to rise tho recovery will bo as sharp as the decline lias been, but the more sober minded agree that tho trade lias received a shaking from which it will take very many months to recover. That the bulk of owners and brokers incline to the belief that values will soon recover at least to some extent is evidenced by the fact that for the third series of sale 6 opened in London on the 12th inst., of the 263,000 bales available for sale one-third has been withdrawn from sale prior to the auctions. Past and present experiences should prove a lesson, and a bitter one, to those growers who during the past season refused the good prices which wore obtainable in the Australian and Now Zealand markets. As regards the next clip, it is of course as yet rather early to venture an opinion, but it may be as well to let wool -users know that there is likely—in fact, almost sure to be —a further shrinkage in supplies from Australasia.”

This last fact should have an important bearing on the situation, and from every standpoint the position for New Zealand sheepfanners begins to look more encouraging.