Wool futures steady in quiet week

Press, 19 May 1984, Page 21

Wool futures steady in quiet week

Futures prices traded exactly as expected this week, prices on Monday and Tuesday mounting an assault on the 480 resistance level, basis May 85 contract, Mr Peter Corban, of Jordan, Sandman and Smythe, the Auckland sharebroker, said yesterday. As expected, this level could not be maintained in advance of the weaker Auckland wool sale yesterday. Prices therefore came back on Wednesday before closing the week at roughly the same level as the previous Friday’s close.

The volume this week was very light as speculative interest waned because of the lack of price volatility in the market, Mr Corban said. Any short-term rise of around 10c or more, although unlikely, would be a good selling opportunity.

“The reason for this is that although the physical price at auction should definitely show signs of strength over the rest of the season, this would appear to have been discounted By the futures market at current levels," Mr Corban said.

Mr Geoff McDonnell, futures manager for Mair and Company, the Christchurch wool firm, said the week had seen lack-lustre futures activity with a volume of 265 trades for the week, which was a typical daily volume in late January. Part’of this could be attributed to lack of investor interest as the season draws to a close and the fact that no major fundamental events (such as a devaluation as happened in 1983) had caused the hedgers to take more interest in the market

Futures prices were at the top of the trading range on Tuesday and fell 6c across the board to a low on Wednesday in anticipation of a weaker wool sale at Auckland (yesterday). Mr McDonnell said. Prices firmed on the futures market yesterday as buyers came in at the support levels, i.e. Jan 85 trading at 455 and May 85 trading at 473. From a technical point of view the change showed that a

break-out of the current price range is about to occur and this may coincide with the wool sales next week. "For a bullish trend to continue we would have to see January 85 contracts trade above 461 and May 85 above 480, both of which have been resistance levels now for six weeks,” Mr McDonnell said.

The charts pointed to an upward move But the fundamentals were not necessarily in support of this, he said. However, good quality wool has been in demand since January, while poorer quality, although selling well, had not commanded high prices. “This trend in physicals could point to the middle months on the futures market holding the present price levels in anticipation of good demand at auction next season.”

' A spokesperson for the Christchurch wool firm, John Marshall and Company, Ltd, said the futures market this week was relatively quiet, an over-all easier tone emerging towards the middle of the week. The easier tone came after higher prices reached at the beginning of the week, prompted largely by better-than-expected prices' paid for wool at the Christchurch wool sale on Friday, May 11. said the Marshall s spokesperson.

"It has been the nearer months that have been more active this week, creating a tilt in the market structure. The nearer months have tended to firm while the latter trading months have slowlydrifted back. With stock slowlybeing taken off the market a certain nervousness hangs over the August 84 trading month."

Fundamentally inquiry was still relatively high with slight increases in prices for forward physical delivery of wool.

Technically, if orices stabilised about 1 to 2 cents below current levels we would expect to see a further rise in the prices for futures." said the Marshall's spokesperson.

Next week's wool sales.— Napier. May 24. 23.000 bales plus bv separation. Wanganui. 5000 bales: Dunedin. May 25. 15.000 bales and by separation Invercargill. 18,000 bales (carried forward from May 17).