FUTURES Wool contracts setting hot pace

Press, 13 December 1986, Page 35

FUTURES Wool contracts setting hot pace

Wool futures finished their most exciting week for some time with further strong rises yesterday.

From the close on Thursday to yesterday’s close futures contracts rose as much as 9c a kilogram. Mr Guy Spooner, of Marshall Futures said one factor was the firming of the physical market. At auction wool prices rose 20c a kilogram from the last sale of last week to this week’s last sale.

Much of the trading yesterday, as earlier in the week, was stop-loss buying by those short (with selling positions) in the market.

At the end of trading the market had eased, and there was some selling pressure in the middle months. The futures market this week was again extremely volatile, with more than 1100 lots traded, and trading ranges of 35c in most months ($875 a contract), said Mr Spooner. "The outlook for physical wool prices from now until the New Year looks encouraging for the farmer, but it would be hard to justify a further rise in futures for the meantime.” Mr Geoff McDonnell, manager of Mair Astley Futures, said the lift of 30c to 40c across the board during the week caught the market by surprise. "Exporters with large forward sold positions have been caught by shortages of wool at auction and the resulting higher prices. We see strength remaining at auction

and see no reason for wool futures to fall. A reluctance by the New Zealand dollar to move higher would support this view. In the meantime, we would favour the long side of futures.”

Gnwrnmpnt ctnnk uuvernmeni SIUCK Government stock futures

fell yesterday closing a gap at 8270 in March, said Mr Mark Thiele, of Egden Wignail and Company Futures. “We now see Government stock futures as a buy for a target of at least 8300.”

Miss Jenny chin - of Mar ‘ shall Futures, said March Government stock futures

went through another volatile trading patch as dealers reacted to economic data and tender results. A high of 8360 and a low of 8268 gave a trading range of nearly 1 per cent, she said. “Day trading is bringing big profits and losses to those participating. Consolidation has yet to be seen, but we favour buying into dips around the 8270 level for a longer hold. Stop-losses should still be placed to avoid any great movements from information the market may not have already discounted.”

Marshall Futures expects more volatility before the New Year. Bank bills traded between 8070 and 7795 showing extreme volatility in the near months, Jenny Chin said. This represented a profit or loss of $3069.51 a contract.

“The large movements and good liquidity have been attractive to speculators and hedgers alike.”

Results in the stock tender yesterday were in line with secondary-market yields, said Mr McDonnell. “However, the level of bidding was down on tender No. 37, which indicates that few investors can afford the low yield on stock in relation to yields available from the short-term market.” There had been a certain amount of book squaring occurring before the Christmas break. “We see little reason for major moves up or down on this index.

“All eyes will be on the Minister (of Finance, Mr Douglas) in the coming week when he announces his plan to fund the blow-out in the deficit. Any reluctance by the Minister to have a stock tender in the March-1987 quarter could see a floor on bond prices and a low on the future’s index. On the other hand if he has a tender, rates could continue their upward trend.” 90-day bank bills This contract had a volatile week, the index moving through 150 points, said Mr McDonnell. The firming call rate — up to 24 per cent yesterday — put pressure on term rates, and this a falling index on the futures contract. “With liquidity expected to be tight through to Christmas as the Government maintains its tight monetary policy, and pressure is on the monetary system to settle Friday’s stock tender we see no reason for term rates to drop. The short side (selling position) of the futures index may be the way to go.” U.S. dollar U.S. dollar futures gapped down yesterday, but closed near their highs, said Mr Thiele. "This indicates that the market will close the gap on the upside at 1.9970. We see the kiwi falling to 48.65 U.S. cents by the end of the month,” he added. The kiwi dollar finished the week at the top end of its range, because of capital inflows into New Zealand. When the kiwi dollar broke through $U50.5050 and then SUSO.SOBO this caused some short covering, generating more upward pressure on the currency, Mr McDonnell said. "In the meantime, we see the kiwi trading in a 5U50.5050 to $U50.5150 range without much risk of a major break-out on either side. December U.S. dollar futures finished their trading on Wednesday with a mandatory settlement of 1.9967, representing a mid-rate of 50.08 U.S. cents for the New Zealand dollar.

Miss Jenny Chin, of Mar-

Mr Howard Wilcox has been appointed senior manager, futures, of NZI Finance, Ltd. Mr Wilcox has been in the finance industry for six years having worked with NZI Securities before going to London for two years experience in the finance futures markets.

shall Futures, said January contracts traded between 2.0245 and 1.9750 on moderate volume, a potential profit

or loss of $2475 a contract "The kiwi dollar looked stable around SUSO.SOOO and crept up all week to a high of $U50.5120 before profittakers sold the unit to $U50.5090. “Although there appears to be buying interest we believe it is interbank driven rather than offshore interest, so we are in favour of seeing a lower kiwi dollar from here. If offshore interest is renewed the kiwi dollar could stabilise and move higher. Book squaring ahead of the festive break could prove interesting and bring volatile movements.” In Sydney, December share price index futures closed 17.0 points down at 1457.0 yesterday after reaching 1475.0. SUS CONTRACTS Mth Open H/L Last Vol Jan 1.9750 9870/726 9830 43 Contracts traded: 43 Open positions at December 11: Jan 444, Feb 10, Mar 13, total 467 (down 409). COMMERCIAL BILLS Contracts traded: Nil Open positions at December 11: Jan 6, ,Feb 5, Mar 381, Jun 124, Sep 47, Dec 45, Mar 46, Jun 10, total 664 (down 94). GOVERNMENT STOCK Mth Open H/L Last Vol

Mar 8280 285/268 276 662 Contracts traded: 662 Open positions at December II: Jan 7, Mar 1860, total 1867 (down 1689).

Open positions at Dec 11: Dec 50, Jan 164, Mar 456, May 531, Aug 226, Oct 197, Dec 145, Jan 204, Mar 180, May 86, total 2239 (down 25). WHEAT FUTURES Contracts traded: Nil Open positions at Dec 11: Feb 13, Mar 25, May 18, total 56 (same).

uec oiuv oiuu/oiuv oiw iv Contracts traded: 253 Open positions at Dec 11: Jan 479, Feb 7, Mar 40, total 526 (down 5).

N.Z. FUTURES MARKET WEEK ENDED December 12 Trading Traded prices Total Open months This week To date this cont's SUS High Low Last High Low week Dec ’86 2.0060 1.9880 1.990 2.03901.9290 112 0 Jan ’87 2.0365 1.9726 1.9830 2.1451 1.9000 284 444 Feb ’87 — — — 2.00001.9750 — 10 Mar ’87 Totals PCP — — — 2.08001.9930 396 13 467 Dec ’86 7955 7870 7925 8545 7850 181 0 Jan ’87 — — — 8250 8100 6 Feb ’87 — — —— 8225 8225 5 Mar ’87 — — — 8500 8050 — 381 Jun ’87 — — — 8520 7800 — 124 Sep ’87 —— — — 8500 7800 — 47 Dec ’87 — — — 8565 7800 — 45 Mar ’88 — — — 8500 7800 — 46 Jun ’88 — — Totals GOVERNMENT STOCK — 8450 8410 181 10 664 Dec ’86 8301 8267 8272 8490 8212 1993 0 Jan ’87 8272 8270 8272 8435 8245 2 7 Feb ’87 — — — 8280 8207 — 0 Mar ’87 8360 8268 8276 8455 8249 2349 1860 Jun '87 • — — — 8580 8400 — Sep '87 Totals WOOL — — — 8436 8400 4344 1867 Dec '86 579 576 576 579 475 66 50 Jan ’87 599 564 595 599 474 178 164 Mar ’87 605 570 601 605 480 302 456 May ’87 614 574 608 614 486 261 531 Aug ’87 629 581 619 629 532 93 226 Oct ’87 625 585 624 625 530 47 197 Dec ’87 626 598 624 626 541 42 145 Jan ’88 625 598 625 625 541 63 204 Mar ’88 625 587 625 625 551 49 180 May ’88 Totals 630 595 628 630 575 60 1161 86 2239 Tenderable December WHEAT stock: 12 23 bales. 35F2D quotes — I 588 at Napier, Feb ’87 — — — 2290 2060 — 13 Mar ’87 — — — 2330 2050 — 25 May ’87 — — — 2350 2060 — 18 Jul ’87 Totals — — — 2150 2150 0 56

WOOL FUTURES Mth Open H/L Last Vol Jan 595 599/593 595 30 Mar 556 605/556 601 75 May 605 614/605 608 38 Aug 629 629/619 619 3 Oct 625 625/620 624 5 Dec 625 626/623 624 16 Jan 625 625/624 625 36 Mar 605 625/605 625 28 May 620 630/620 628 11 Contracts traded: 242

99-DAY BANK BILLS Mth Open H/L Last Vol Jan 7820 820/795 817 129 Feb 7840 900/840 900 6 Mar 7950 8000/7950 7990 68 Dec 8000 8000/8000 8000 10 Mar 8000 8000/8000 8000 10 Jun 8100 8100/8100 8100 10 Sep 8100 8100/8100 8100 10 Dec 8100 8100/8100 8100 10