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UNITED STATES DEPARTMENT OF AGRICULTURE
SBureau of Agricultural Economics
WOOL-7 July 9, 1937
UNIV OF FL LIB
THE WOOL SITUATION
There was little activity in the domestic wool market during June, the
Bureau of Agricultural Economics reports. Prices of medium wools were
slightly higher at country points the latter part of the month but quotations
at Boston were largely nominal. Since world supplies of wool are below average
for this season of the year and demand conditions in this country and abroad
continue rather favorable, little change in wool prices is expected prior to
the opening of the new Southern Hemisphere selling season in September.
Present prospects indicate that wool production in Southern Hemisphere
countries will be larger than that'of-last year,
Consumption of apparel wool in the United States in the first 5 months
of 1937 was almost 20 percent larger than a year earlier and was larger than
in the same months of any year since 1923. Unfilled orders held by mills
have been sharply reduced in the past 2 months, and some decline in consumption
is likely in the last half of the year.
General imports of.apparel wool into the United States in the first
5 months of 1937 were larger than in the sane period of any year since 1926.
The large purchases by the United States were an important factor in the
almost complete clearance of the 1936-37 clip in the Southern Hemisphere at
prices which were higher than those of the previous season. In view of the
present relatively small domestic supplies, United States imports of wool in
the first half of 1938 may be fairly large. With prospects for a decline in
mill consumption later this year, however, imports are not likely to equal
those of the first half of the current year.
Exports from the five most important wool-producing countries of the
Southern Hemisphere to May 31 of the 1936-37 season exceeded those in the
same period of the preceding season and also the preceding 5-year average
by 5 percent and were the largest in the 10-year period 1927-28 to 1935-36.
It seems probable that all stocks which accumulated in the Sruthern
Hemisphere during the depression have now been liquidated and that there will
be very little carry-over into the coming season.
BACKGROUND .Wool prices in the United States
advanced sharply in the latter part of 1936.
The rise in prices was the result of the strong
domestic and foreign demand and relatively small
supplies of wool in the United States and foreign
countries. The advance in prices of domestic
wools was checked in the early months of 1937, but
quotations remained firm on the relatively small
supplies of spot domestic wool at Boston until
wools from the 1937 clip began to arrive in quantity.
Prices during May were marked down sharply at
Boston and some decline was also reported at country
points. This decline in the domestic market was
accompanied by lower prices in foreign markets.
Wool Sales and Prices
The recent decline in domestic wool prices was halted in June and
prices were firr to slightly hi. ier on a few grades after the middle of the
month. A strike of wool handlers in the latter part of June practically
closed the Boston market to mills as a source of raw wool supplies. Sales
in that market were very small and prices were almost entirely nominal.
Ch.ng.es in domestic wool prices in June were reported chiefly on
medium grades of Ohio and similar fleece wools. Country packed medium wools
from Ohio and !.ichigan in lots containing 3/8 and 1/4 blood grades of
combing and clothing lengths were quoted at 42 cents, in the grease, delivore
to Eu-tern buyers, the latter part of June compared with 40-41 cents the
end of ;'.y and 45-46 cents in April.
Trading in territory and Texas wools was very light in June and prices
were mostly unchanged. Boston dealers offering wools to arrive in the near
future were quoting 95-97 cents scoured basis for good French combing fine
territory wools in original bags or for good 12-months' Texas wools the
latter part of June. Quotations on spot territory wools at Boston were
largely nominal in view of the lack of trading.
As..a result of large imports, stocks of wool in the United States on
June 1 were estimated by the New York Wool Top Exchange Service to be
slightly larger than a year earlier but stocks were well below the June 1
average of the preceding 10 years. The season of large imports for 1937
is now finished and changes in stocks during the remainder of this year will
depend largely on mill consumption of raw wool.
Consumption of wool by United States mills continued relatively high
in May. The weekly average consumption of apparel wool for the 4 weeks
ended May 29 was 5,716,000 pounds scoured basis compared with 5,796,000
pounds in April and 4,324,000 pounds in May 1936. Consumption in the first
5 months of 1937 was almost 20 percent larger than a year earlier and was
larger than in the same months of any year since 1923.
The consumption of apparel wool in the first 5 months of this year
was equivalent to 219 million pounds of shorn wool, greasy shorn basis and
37 million pounds of pulled wool, greasy pulled basis. Mill consumption on
a grease basis in the same months of 1936 was equivalent to 191 million pounds
of shorn wool and 34 million pounds of pulled wool.
Business in the wool goods market for menws wear was slow in May and
June and unfilled orders were sharply reduced. The New York Wool Top Exchange
Service reports that unfilled orders for men's wear fabrics at the end of June
were equivalent to 7 to 8 weeks production at the current rate of machinery
activity. Sales of women's wear fabrics wore good in June and unfilled
orders have increased.
General imports of apparel wool into the United States in the first 5
months of this year were larger than in the same months of any year since
1926. The large purchases by the United States were an important factor in
the excellent clearance of the 1936-37 clip in the Southern Hemisphere at
prices which tre higher than those of the previous season.
The United States probably will import a considerable quantity of
wool in the first half of 1938 but in view of prospects for a decline in
mill consumption later this year imports are not likely to equal those of
the first half of 1937.
The principal developments in the domestic wool situation thus far
this year have been the very large mill consumption, below average stocks,
and a level of domestic prices higher than for any similar period since 1929.
Total returns to producers for the domestic wool clip this year probably
will be near the largest on record.
Wool prices in this country are now somewhat higher than in 1929,
whereas prices of other textile, materials (cotton, rayon, and silk) are
lower than in 1929. This price relationship does not favor a continuation
of the present high level of mill consumption. In view of the very high
level of domestic mill consumption since early 1935, it is possible that
in the past year there has been a considerable accumulation of finished
wool goods in the several channels of trade. Unfilled orders for wool
goods have been reduced considerably in recent months. Hence it does not
appear likely that mill consumption of apparel wool in the last half of
1937 will be so large as in the corresponding period of 1936. But despite
the prospects for some slackening in domestic mill demand from the current
high level, little change in wool prices is probable until the new Southern
Hemisphere clip becomes available next fall, since present world supplies
of wool are much below average.
Wool Sales and Prices
The fourth series of London wool auctions for 1937 opened on July 6.
Opening prices for good quality merino and crossbred wools, both greasy and.
scoured showed no change compared with the close of the previous series on
May 6, according to a cabled report from the London Office of the Bureau of
Agricultural Economics. Prices of inferior quality merino wools were slightly-
lower than in May and slipped wools were 7-1/2 percent lower. With the
exception of the summer sales-at Brisbane, these are the only important wool
sales to be held until the opening of the new Southern Hemisphere sollingseason
Prices of tops and yarn at Bradford have declined about 2 cents a
pound since the middle of May. Sales at the lower price levels were reported
to be relatively small in June.
Southern Hemisphere sales
Sales at Southern Hemisphere centers in May and June were chiefly of
a clearing nature. The summer series held at Brisbane Australia which
opened on June 16, offered a good selection of new clip wools. Prices of
good quality wools at the opening of the series were generally 5 to 10 percent
lower than at the close of the last previous sales at Brisbane the end of
April. Trading was active during the series and prices remained firm to
slightly higher to the end of June.
Outlook for 1937 Wool Clip in the Southern Hemisphere
Interest is now centering in the Southern Hemisphere wool clip which
comes on the market in the fall of 1937. The outlook is for another large
Australian clip, and for probable increases in New Zealand, and the Union
of South Africa. Sheep numbers in New Zealand have been increasing at the
rate of 1 million a year since 1935, in the Union of South Africa there was
an increase of more than 4 million head between August 1935 and August 1936,
whereas in Argentina the number increased more than 1 million head in the
The coming Australian clip that shorn in the last half of 1937
and marketed during the season beginning July 1, 1937 is estimated at
1,014,000,000 pounds grease equivalent according to the pre-shearing
estimate prepared at the combined meeting of the Australian Councils of
growers and selling brokers in mid-June. This is slightly larger than
the production last year and about the same as production in 1934, Wool
production in Australia has equalled or exceeded 1 billion pounds for the
past six seasons, that is, since 1931-32. The average production for the
10 years preceding was only 836 million pounds, according to official
Wool production in Argentina in 1936-37 is now estimated at 351 million
pounds according to official sources, an increase of 5 percent above 1935-36.
The average for the five seasons, 1930-3'1to 1934-35, from the same source
was 359 million pounds. Reliable estimates of production for the 1937-38
season are not yet available for Argentina and Uruguay. Early estimates
based on reports of the trade placed production in Argentina in these 2 years
considerably higher than the official estimates, namely, 373 million pounds
in 1936-37 and 359 million pounds in 1935-36. It is probable that these
latter figures include estimates of wool exported on skins.
Wool production in six important Southern Hemisphere countries in
1936-37 is now estimated at 2,038,000,000 pounds, according to latest
production estimates, an increase of 1 percent. above 1935-36.
Apparent Supplies of Wool in Southern Hemisphere, June 1
Apparent supplies -/of wool in the five most important countries of
the Southern Hemisphere on June 1 were 22 percent below those at the same date
of 1936 and 31 percent below the preceding 5-year average, on that date.
The decrease in supplies was apparent in all countries but was most
marked in New Zealand and Argentina. In New Zealand, according to latest
estimates, apparent supplies at the beginning of June were the smallest since
1928-29 and in Argentira the smallest in the 10-year period 1927-28 to
1936-37. The bulk of the production in these two countries is medium and
a 1/ Production plus Carry-over minus exports to latest month.
Exports from Southern Hemisphere Countries
Exports from the five most important wool producing countries of the
Southern Hemisphere for the season 2/ 1936-37 up to May 31 amounted to
1,736,000,000 pounds and exceeded those of the preceding season by 5 percent
and the preceding 5-year average also by 5 percent. Exports thus far this
season are the largest for the 10-year period 1927-28 to 1935-36. It
seems probable that all the stocks which accumulated during the depression
have now been liquidated and that there will be very little, if any,
carry-over into the coming season. The largest increases in exports above
a year ago were 29 percent in Argentina; 19 percent in the Union of South
Africa and 13 percent in Uruguay.
Exports from the Southern Hemisphere to the United States increased
sharply in 1936-37. Exports from Argentina and Uruguay to North American
destinations principally the United States, amounted to 104 million pounds
in the 8-month period from October through May, an increase of 67 percent
above the same period of 1935-36. Exports from the British Empire countries
of the Southern Hemisphere to the United States for the 10-month period,
July through April, reached 107 million, pounds and were 147 percent larger
than a year ago. United States purchases were made chiefly in Argentina
Exports to European countries and Japan from the principal Southern
Hemisphere countries for the 10-month period, July 1 April 30, were
considerably smaller than a year earlier. Belgium and Italy were the
only important foreign countries taking larger quantities of raw wool
through April of the current season than in the same months of the previous
Stocks in Importing Countries
The decline in wool shipments to European countries and Japan in the
1936-37 season probably exceeded the decline in consumption in those
countries and stocks in importing countries are relatively low. Retained
imports of wool in the United Kingdom from November to May were about 63
million pounds smaller than in the same months of the previous importing
season. The decline in consumption of imported wools by the British
industry in the same period was estimated by Mallott and Company at 28 million
The increase in imports into Belgium and Italy.has been accompanied
by greater manufacturing activity and an increase in exports of wool
manufactures for those countries.
2/ Export season closes June 30, in Australia, New Zealand and the Union
of South Africa, and. September 30 in Arguntin? and Uruguay.
Manufacturing Activity in Importing Countries
A decline in wool manufacturing activity was reported from the
principal foreign consuming countries in May. The British Ministry of Labour
reports that the percentage of insured workers in the woolen and worsted
industry of the United Kingdom registered as unemployed on May 24 was 10,1
compared with 7 percent a month earlier and 9.9 percent a year earlier.
The increase in unemployment in May was particularly noticeable in the
woolen section but there was also an increase in some divisions of the
worsted section. Mill activity alsowas reduced in France and Belgium
during May because of a decline in new orders, according to reports from
the ,.Berlin Office of the Bureau of Agricultural Economics.
Manufacturing activity continued to improve in most branches of the
Italian wool textile industry in May, largely as a result of good export
sales. Conditions in the Italian industry have improved since the abandon-
ment of sanctions and the devaluation of the lira. Italian imports of raw
wool, in the first quarter of 1937 were- more- -than twice- as -large as in the
same months of 1936, and they wore unusually small-.
Despite the fact that raw wool imports into Germany continue
relatively low, mill activity in the industry remained fairly satisfactory
through May.. Considerable quantities of reclaimed wool-and substitute
fibers are being used to meet the raw material requirements of the wool
industry. According to the semi-annual report of the German Institute
for Business Research the production of worsted spinning and weaving mills
declined in 1936 as compared with 1935 as a result of the reduction in
raw wool supplies. The spinning and weaving of woolen yarns on the other
hand was increased through greater use of reclaimed wool which is suitable
for the production of woolen yarns.
Although wool consumption by mills in the United Kingdom has
decreased recently, the improved economic conditions and continued
expenditures for armaments are likely to keep mill activity in that country
at a fairly high level during the second half of 1937, although perhaps not
as high as in the past 2 years. The unsettled economic conditions in France
make the outlook for wool consumption by the French industry rather
uncertain, A continuation of the recent improvement in mill activity in
Italy will depend upon the expansion of export trade in wool manufactures.
Little increase in German raw wool consumption is likely under present
Table 1.- Price of wool per pound in specified markets and prices of
textile raw materials in the .United States, selected periods,
Market and description
Territory combing,scoured basis
64s, 70s, 80s (fine) .......
56s (3/8 blood) .............:
46s (Low 1/4 blood) ........:
U. S. farm price(l5th.of month) :
Grease basis ....... ......... :
Average quality, clean cost /
70s ...... .... .... ... :
56s *.. ....... ... ... ..... :
46s ..... ...... ........... :
Scoured basis -
64s warp ............... :
50s ............. ..... .... .:
- 1935 1936 : 1936
:-Cents Cents Cents
. Apr. May
25.8 33.2 32.7 31.4
Textile fibers -
Wool, territory fine scoured
Cotton, 7/8 Middling j/.....:
Silk, Japanese 13-15 6/.....:
Rayon yarn 150 derior ....:
End of season Prices not representative
Foreign prices have been converted at prevailing rates of exchange.
2/ Average of quotations for each series of London sales as reported by the
London Office of the Bureau of Agricultural Economics.. For months when
no sales were held figures are interpolated.
/ Top and roil in oil.
i/ Quotations reported about the 25th of the month by the London Office of
the Bureau of Agricultural Economics.
/ Average at 10 markets.
6/ 78 percent white, at New York.
I-'- ---- `-- -"I-
Table 2.- United States: Wool consumption and machinery activity,
specified periods, 1936 and 1937
. 1936 1937 .
Consumption, scoured basis / :
Weekly average -
Carpet ........... ... :
Carpet ......... ..... .
: Percent Percent Percent
Machinery activity 1/
Worsted combs .......:
Worsted spindles ......:
Woolen spindles ......:
Looms broad 2/ ......:
Loons narrow .........:
Carpet and rug looms ..
Consumption and machinery activity figures from the Bureau of the Census.
1/ Figures for May based on 4 weeks, April on 5 weeks, and January-May on
22 weeks. No adjustment made for holidays.
2/ Over 50 inches.
- 0 -
UNIVERSITY OF FLORIDA
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