Text Box: Wool Collar contract

The Wool collar contract sets a minimum price for your wool whilst allowing for market upside. Contract cost is kept low by placing a ceiling on upward price movement.

 

The Contract

· Maturity date (when wool is to be sold).

· Quantity of wool to be minimum priced (in kilograms clean).

· The anticipated quality (Micron category).

· The Minimum Price (X) provided by your broker.

· The Maximum Price (Y) provided by your broker.

· The Contract Charge (Z), deducted at Finalisation.

 

Spot wool sale (auction).

Your wool is sold in the usual way at auction on the date

 specified.

· The actual quantity is determined.

· The average price for the wool is determined (D).

· The Micron Price Guide (MPG) is determined by AWEX (E).   

 

Finalisation

· The Indicator Price (B) equals the greater of either the Minimum Price (X) or the AWEX MPG (E)

     to the Maximum Price (Y).

· The Quality Adjustment (C) equals your Average Wool Price (D) minus the AWEX MPG (E).

Your final contract price (A) is easy: The Indicator Price (B)

plus the Quality Adjustment (C) less the Contract Charge (Z).

 

Wool delivered above the contract quantity is payed out at the

Average Wool Price (D).

Text Box: Text Box: Home Text Box: Wool Indicator Contract Text Box: Minimum Price Contract Text Box: Interactive Examples Text Box: Target Price Watchdog Text Box: Home Line Callout 4: The minimum level your indicator price can fall to. Line Callout 3: Your price is capped at this level. Line Callout 3: This charge relates to the time and risk in providing the contract. Line Callout 3: As the Min Price is higher than the MPG. Min price is used. Text Box: Back