The contract will be cash settled using a broad based index of 36 to 40 micron wool types that has been developed by Tectra Limited to ensure wool prices are directly comparable from one sale to another regardless of the types of wool offered at those sales.
The introduction of the New Zealand Broad Wool Futures Contract follows extensive work over the past 18 months with market participants, in particular OM Financial.
“The wool futures market can provide anonymity and effectively eliminate counter-party credit risk”, said Mr Colin Churchouse of OM Financial. “Irrespective of whether wool growers trade wool futures they should reference prices in the wool futures market as it will be a very useful tool to evaluate forward sale agreements, making investment and/or production decisions”.
Mr Greg Boland, the SFE Regional Manager for New Zealand said “the introduction of the New Zealand Broad Wool Futures Contract will provide a means of hedging wool price risk. They also allow new arbitrage and spread trading opportunities with the physical wool market in New Zealand, and the existing Australian Fine Wool (19 Micron), Greasy Wool (21 Micron) and Broad Wool (23 Micron) Futures contracts listed at the SFE.
To raise awareness of its wool futures market the SFE will be running the second round of training courses between 14 th and 23 rd June 2004 and for a limited time (twelve months) publish market data in real-time, including the bid, offer, last trade, traded volumes and the previous settlement price on its web-site – www.sfe.com.au.
