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Basis Contract


In a deregulated market wool prices are determined by supply and demand. This leads to volatility across all micron ranges, with rises and falls occurring over relatively short periods of time. Wool growers should have the flexibility to take advantage of price movements while still participating in the auction system.

 

Landmark’s Wool Basis Contracts give growers the opportunity to manage their future wool price with forward-pricing tools that cater to all market views and give a high degree of price certainty when wool is sold at auction.


What Is a Basis Contract?

Our Basis Contracts allow you to lock in a contract price up to three years ahead that closely matches your wool production.

 

The contract price is a forward price based on the Australian Wool Exchange (AWEX) Micron Price Guide (MPG), ranging from 17 through to 28 micron.

 

When the wool is sold at auction, you receive the contract price, plus or minus the ‘basis’. The basis is the difference between the AWEX micron price guide on the day of the auction and the price realised for the grower’s clip determined by the physical characteristics of the wool.

 

We offer a range of Landmark Wool Basis Contracts to provide wool growers with effective market protection.


What Does It Mean for Wool Growers?

Growers can lock in a base price for all or part of their clip up to 36 months ahead of shearing.

 

Wool Basis Contracts allow growers to tailor price risk management to their individual marketing needs with the flexibility to alter the amount of wool covered by contract or even settling the contract early, if they choose, while still participating in the mainstream auction system.

 

For more information contact Landmark Risk Management on freecall 1800 629 396.


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