THE H.B. TRIBUNE WEDNESDAY, NOV. 26, 1930 WOOL DOWN

Hawke's Bay Tribune, Volume XX, Issue 290, 26 November 1930, Page 4

THE H.B. TRIBUNE WEDNESDAY, NOV. 26, 1930 WOOL DOWN

The opening of the season’s wool sales held in the Dominion has been awaited with anxious interest by thousands of New Zealand farmers. Some apprehension was necessarily aroused by the downward trend even from last season’s prices that had already manifested itself in Australia, and the reports wo now have of the first Auckland sale fully justify these misgivings. The decided fall in selling values that they disclose are emphasised by tho fact that tho comparisons made are with the prices realised at the corresponding sale last year. The drop is, of course, not nearly so marked when the comparison is made with the prices ruling at the autumn sales. This, however, can bring only very cold comfort to the sheepfarniers, for it means not that their profits are being reduced, but that their losses arc

being very materially increased. Should these low prices be maintained it is difficult to gauge What it may mean not only to the farmers themselves, but aiso to the community at large. It cannot be forgotten that the difficult times we are all already experiencing are in great measure due to the poor money returns which our rural industries provided last year and they now look like being badly aggravated by still further depreciation in export values.

The first question, of course, is as to how far we are to take this Auckland sale as an index to those that are to follow in the various centres. This is a question for the experts at the heart of affairs to answer, but even they are probably just now in something of a quandary as to the form the answer should take. It is not, of course, to an examination of local conditions that we have to look for it, although they certainly have some bearing on it. The root causes really lie on the other side of the world and are altogether beyond any remedy that can be found or devised out here. Even over there, if we are to take the Auckland sale as any criterion, the expert forecasts would seem to have been at fault. London and Bradford press correspondents, presumably well informed, have been careful not to awaken any extravagant hopes of recovery. At the same time, however, they have in the main indicated an opinion that, at the worst, last autumn’s prices would be pretty well maintained. They have suggested that, owing to uncertainty in the markets both for the raw material and the manufactured article, stocks of wool had been allowed to fall to a hand-to-mouth level. It was therefore thought that the low prices ruling would be sure to stimulate demand for the necessary replacement stocks and that, if anything, selling values might improve a little. apparently this stage has not yet been reached so far as Bradford is concerned, at any rate with regard to the types of wool that constitute the bulk of the Dominion’s clip. Indeed, from current Sydney reports much the same has to be said with respect to the finer class of wools that form the greater part of the offerings in the Commonwealth. There, as was the case at Auckland, Great Britain is anything but a brisk bidder, and foreigners are securing most of the prime stuff. One of the correspondents noted speaks of the tightness of finance throughout the woollen industries in the Old Country, and this is probably one of the factors in the present inactivity of British buyers. He tells not only of serious failures, but also of old firms giving up business before losing all their capital, and of the banks insisting on having debenture securities over all the assets of others. But, despite this, the opinion was expressed that there would still be quite sufficient buyers to absorb the current season’s clip in both Australia and New Zealand. On the other hand, it has to be recognised, so far as touches New Zealand, that in seasons of low wool values it is the coarser and poorer sorts that suffer most, a fact that has been strongly in evidence at Australian sales and is also to be noted in connection with that at Auckland. It may be as well, however, not to draw any too ready conclusions from yesterday’s Auckland sale. Just as one swallow does not make a summer, so poor prices at one sale, and especially at a first sale, do not necessarily mean a similarly depressed market throughout the season. In fact, it may be hoped that Auckland prices will carry conviction to buyers that bed-rock has at length been reached and a warning, also, that, unless prices improve, sellers will be driven out of business and supplies fall so short as to bring about a reaction to prices as strongly against the buyers. Beyond this is the pretty well recognised fact that, taken all round, the Auckland clip does not represent the best quality, while we are also told that there was a great deal to be desired in the preparation of many of the fleeces for the market. There may therefore bo fair reasons for hoping that, as the season advances the tone of the market will show the improvement for which there is evidently so much room. In the meantime it is equally evident that it behoves us all to conserve resources to the utmost, for, at the best, we cannot expect that there will be any rapid recovery to the point of easy prosperity.