This is according to Cape Wools CEO, Louis de Beer. He told producers attending the Free State Congress of the National Wool Growers Association, the NWGA, they hope to roll out the new initiative around the middle of the year:
“Obviously we have methodology within the industry for certain roleplayers to hedge some of their risk, but there is no method for a producer, for example, to hedge his delivery risk or price fluctuation risk. So this is something that got us thinking and we approached the JSE and started talking to them about a futures contract for us to be able to hedge our risk based on our market indicator.
“So it’s an indicator traded wool futures contract. It is not a contract for delivery, it’s literally just a contract based on the index.”
He says both hedgers and speculators will be able to participate and this will also give people not involved in the wool industry an opportunity to gain insight into how well wool is doing.
“The intention is that the liquidity in the industry is generated by speculators but we are quite excited about that because we get a bit of exposure from a different perspective.
“People who aren’t involved in the wool industry now have a chance to look at the wool industry from a different perspective and say ‘hang on a second, these guys are doing fantastically’.”