Forward-selling clip is a "no brainer"

Forward-selling clip is a "no brainer"

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OCTOBER 2018 saw the peak of the bull wool market and Spearwood Wool had forward selling enquiry from all wool growing areas of Western Australia.

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OCTOBER 2018 saw the peak of the bull wool market and Spearwood Wool had forward selling enquiry from all wool growing areas of Western Australia.

At this time Spearwood Wool clients Dennis and Glen Cowcher, of Coolakin just outside Darkan, forward sold a portion of their 2019 and 2020 wool clips for September and October deliveries this year and next to guarantee the viability of the business.

Glen Cowcher said for them to forward sell a portion of their clips was a no brainer.

"The prompt market at the time was probably 50 to 80 cents greasy above the price we sold the 2019 delivery wool at, but we are talking about selling or covering almost 12 months prior to shearing," Mr Cowcher said.

"So to us the discount wasn't that substantial at the record levels at the time.

"And now at the time of our 2019 September delivery prices are 300-400 cents greasy below what we are covered at.

"Admittedly in our time in the industry we have never seen such large price fluctuations, but what we have seen every time we have a boom price is that something outside our control influences price."

Williams wool grower Rod Petchell was another Spearwood Wool client who has consistently sold a portion of his clip on the back for the past three or four years.

Obviously last year the Petchell's forward sold wool didn't match the prices of the uncovered or prompt delivery wool, but the price difference this year has more than made up for that.

Mr Petchell said now with the big price correction in the market, he intends to hold his unsold wool until he was happy with the market.

"Knowing that with Spearwood Wool there are no long-term storage charges is another reason I deal with this locally owned business," Mr Petchell said.

"As well I am more than happy with one on one service I receive from principal Andrew Basire and his son Liam."

Andrew Basire said these examples were evidence of local farmers who were looking to take a profit when it was there.

"We offer prices on a daily basis for delivery out as far as two years in advance of shearing, as history has shown with wool there tends to always be a discount to the prompt market, but that's not to say it won't be smart decision come time of delivery," Mr Basire said.

"We don't force growers to sell, it really is the grower's decision to make in the best interest of their business circumstances.

"One thing I do know after nearly 40 years in this industry is you will never go broke making a profit, so if prices are over your budget a wise move would be to cover up a portion of your production at a profit, no matter what time of year it is."

Mr Basire also said with current price fluctuations they were seeing since sales resumed in August the trend seems to be plus or minus 100 cents or more on any given day and that was a big risk to be at the mercy of prompt sale on the day the market drops dramatically.

"Compare this to being able to pick the day and price you are happy with, even if wool is still on the sheep's back," Mr Basire said.

Prompt selling is another option offered by Spearwood Wool and this is done daily and video samples of grower lots offered on the day are sent to buyers nationally and internationally to bid on the day.

More information: contact the Spearwood Wool hotline 24 hours a day or your local Spearwood Wool representative.

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