A future for futures

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Bob GarnantThe West Australian

Southern Aurora Wool, launched on Monday, is offering a new futures platform to wool growers via their brokers.

The service will allow the export trade to hedge fine, medium and crossbred wool in both deliverable contracts and cash settled products, according to director Mike Avery.

"The service will provide exporters with increased possibilities to cover their forward sales and for growers it will provide easier access to minimum price or option contracts," he said.

"A grower will be able to lock in a price while still having the option to participate in a market rise."

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He said futures and options were a tool to spread the return rise over time, rather than being stuck to one outcome on one date if selling only by auction.

"The timing, level, quantity and type of cover are up to the individual grower," he said.

Mr Avery, who has been involved in the wool industry for 35 years, was most recently general manager at Queensland Cotton, and fellow director Garry Booth has a 20-year association with agricultural futures.

Mr Avery said Southern Aurora Wool was formed after a discussion on how wool futures had so far failed to deliver a service that met the needs of most industry participants.

"We needed to provide a combination of a bespoke product that we could tailor to individual growers, via their broker, and a robust deliverable commodity product that services the more direct needs of the exporter," he said.

"We our offering a futures trading platform where a grower can look to manage their individual risk profile either by outright position taking or options (guaranteed minimum price)."

Mr Avery said in the majority of cases the counter party would be an exporter adept at building a serviceable position.

"Our deliverable China Type contracts we hope will deliver a meaningful local market for buyers and exporters and work in conjunction with the index contracts," he said.

For further information, contact Mr Avery on 0409 743 733 or Mr Booth on 0429 012 351.

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