Wool futures volatile

Press, 14 April 1984, Page 22

Wool futures volatile

Wool futures prices this week were firmer to irregular, according to the Christchurch broker, John Marshall and Company, Ltd. There was a “turn around” of 4c to 5c on last week’s close, with fluctuations of 3c to 5c in contracts for most months at the higher levels, said a spokesman for Marshall’s. A combination of speculation and slightly improved inquiry overseas was enough to initiate a technical reaction which pushed futures prices above a longterm downward trend line which had established itself over the previous three to four weeks, the spokesman said. “Prices have tended to settle around the 450 level for August, 1984. “We would expect the market to move within a 3c to 5c range with good buying opportunities around the 452 c level for January, 1985, futures, as it would appear that the futures market is at a 8 to 10 per cent premium relative to the forward physical delivery of wool,” said the spokesman. Prices this week were about the same as last week, said Mr Peter Corban, of Jordan, Sandyman, Smythe, in Auckland, but there was volatility in prices and quiet heavy trading, averaging 150 lots a day. Prices rose up to 10c on Monday from the Friday (April 6) close, before losing most of this gain over the

last three days and a half of this week, Mr Corban said. The confidence early in the week was inspired by several bullish reports, but the market became overbought in relation to the underlying fundamentals of the physical market, Mr Corban said. The result of this was that the trade stepped in and sold the market down for the rest of the week. Despite this the rise in the early part of the week broke a downward trend, giving a technical buy signal on the charts. “The over-all trend of the market seems to have changed from pessimism to cautious optimism, with people in the trade reporting an increase in overseas interest,” Mr Corban said. Easter was seen as a traditional time for a change in the physical wool market, but the market indicator at both New Zealand sales this week — Napier and Christchurch — was 299. The basis of the wool futures contract. 35F2D. was 418 at Napier, and 422 at Christchurch yesterday. Next week there are sales at Auckland on Tuesday and at Invercargill on Wednesday. Neither of these, said Mr Corban, were strong centres. There would be a wait for a fortnight until the next sale, and he expected volatility in the market until then. He expects the market to slide a little next week, but believes buyers could enter the market if prices fall 3c to 4c. He agreed with statements in last week’s report that the nearer months were weaker than the more distant months in contract.