The Copra Outlook

After swinging about, in indeterminate fashion, for several months, the copra market has moved, rather defi nitely, towards a better figure. The London c.i.f. quotation on December 7 was £8/15/- for South Seas sun-dried, and £9/12/6 for Rabaul hot-air dried.

Reference to the table on Page 69 will show that these are the best rates paid since November, 1933.

The Sydney market, of course, is cautiously awaiting further advices from oversea; but it can be said that, at the moment, the feeling is better than at any time for over a year. It is be lieved that the tendency is upward. No one expects prices to rise beyond £10 to £11; but that rate is of interest to South Seas planters—particularly those within the Australian and New Zealand zones, who enjoy an exchange premium of 25 per cent. £10 per ton, c.i.f. London, is equal to £12/10/- in Australian or N,Z. currency; and, if shipping and agency costs are reasonable, the planter can live on those rates, and carry on.

We cannot see any better rates being paid, while international trade remains in its present condition of stagnation.

There can be no return to the commodity prices on which the world’s present economic structure was erected, until some event or condition develops which will shake down the existing trade barriers. Nations are desperately eager to trade with each other. But no nation wants to buy, while all are eager to sell.

Australia, for example, had convulsions when Fiji said she would not buy any more Australian flour, unless Australia bought Fiji bananas. When Australia, said, reluctantly, that she would buy some Fiji bananas, Australian banana growers began to assail their Parlia mentary representatives, and the row is still going on. That is typical of what is happening throughout the world.

Germany, for several decades, was one of the world’s largest consumers of copra. To-day, Germany virtually is out of the market. The recent wave of economic nationalism has closed most of

the world’s markets against German goods. Germany, as a result, cannot es tablish oversea credits wherewith to buy raw materials, including copra, from other nations: She can buy only by pledging her credit —running more deeply into debt. Hitler, whose perfectly justifiable policy is to force the world to open its doors to German products will not allow the Germans to import goods unless the credits are there to pay for them. Early in 1934 Hitler placed a drastic limitation on imports of oil-seeds until the end of the year —a thing which had a very depressing effect on the copra market. In October, this decree was extended until the end of March, 1935 —“the deficiency of oils and fats," it was announced, “will have to be made up by a greater use of domestically pro duced oils and fats.” Reports show that Germany gladly would take far more copra; but she cannot pay for it.

That, in one form or another, is the position all over the world. Italy, devel oping a fear of being driven off the gold standard, suddenly has rationed foreign credit —which simply means that Italian imports are going to be even more dras tically curtailed. America still is plac ing a limitation on her imports of vege

table oil seeds, and thereby is driving huge quantities of Philippines copra onto the world market. France is still imposing a tax upon all imports of foreign copra, as a means of paying a bonus to French growers.

All those nations —Germany, Italy, France, U.S.A. —have been consumers of enormous quantities of copra. Each, for domestic reasons of its own, has cut down its copra purchases. The only free markets leffi of any importance, are those of Britain, Holland and Scan dinavia. Obviously, there can be no marked recovery of copra prices while that position endures.

This is not a condition peculiar to the copra trade. It affects all com modities in general use. Looking out over this chaotic world, noting the barriers that have been raised every where in recent times against inter national trade, one can but wonder, not that commodity prices have recovered so much during the past two years, but that they have recovered at all.

But, as pointed out repeatedly in this journal, there do exist certain depressing influences peculiar to the copra indus try. Newly-discovered processes permit the use of whale oil and some coarse, cheap vegetable oils in fields of manu facturing in which coconut oil formerly was unchallenged; and, at the same time, there has been vast over-production of those low-grade oils. Furthermore, the Unilever Combine is now completely astride of the European market, and able to fix its own prices, supreme and un challenged. It gained control just in time to take fullest advantage of gene ral depression, vast over-production, and the discovery of effective substitutes for coconut oil; and there is no chance of its removing its stranglehold from the copra industry while present conditions con tinue.

Other factors count, also. Shrinkage of world trade has meant over-produc tion of butter; butter prices have fallen

greatly, and people who formerly ate

margarine (of which coconut oil has been an important constituent) now eat butter. Consider this official table:—

If international trade barriers could be broken down, and world consumption could come within measurable distance of world production, Unilever and a score of other monopolistic and ruthless combines might be defied, and producers given a fairer share of commodity prices.

The muddle-headed governments of the world have not yet seen that the more they interfere with the free play of in ternational trade, the more certainly they create conditions favourable for the operations of trusts and combines.

Generally, the copra outlook is better, for which we may thank prim arily the staunchness and steadiness of the British Empire. But there is in sight no other world condition which en courages a hope of prices in excess of £10 per ton, c.i.f. London —except certain war-clouds. No person of this generation wants war. But if conflict is inevitable, we can at least say that, in an economic aspect, the lunacy of war is preferable by far to some of the lunacies of peace.

Major H. S. N. Robinson, secretary of the Melanesian Mission, returned to Sydney by the Malaita on December 7, after a hurried visit to his Society’s mis sion stations in the British Solomon Is lands.

1924 1934 Consumption of butter and margarine, per head in United Kingdom 27.11lb. 33.93lb.

This total divided between — Margarine 12.35 „ 8.10„ Butter 14.76 „ 25.83 „