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Bid:offer ratio shows signs of wider global problems

Yesterday’s trading activity 

Trades for Château Angélus 2010 and Château Mouton Rothschild 2019 led Bordeaux trade by value yesterday (19th July). 

There was also interest in Californian wines, specifically Kongsgaard Napa Valley Chardonnay 2019 and Opus One 2017. 

Bid:offer ratio shows signs of wider global problems 

A bid to offer ratio compares the total value of bids (firm commitments to buy) to the total value of offers (firm commitments to sell) on the market. 

The ratio’s aim is to indicate the level of demand that exists in the secondary market. Historically, a bid:offer ratio above 0.5 tends to indicate the beginning of an uptrend in the market, or at the very least acts as a sign of price stability. 

Currently, the bid:offer ratio on the Liv-ex trading exchange is 0.89. This is down from its high points in late 2021 and early 2022, with more offers currently listed than bids suggesting increased caution from buyers – a sign of the straitened economic global outlook but also an opportunity for buyers. 

As previously examined, the bid to offer ratio is a useful indicator of market sentiment and frequently reflects the world’s macroeconomic situation. 

For example, in 2020, as the reality of Covid-19 spread and lockdown was announced, the ratio dropped to 0.2. And as a consequence, the market weakened. 

The ratio this year has increasingly declined since Russian invasion of Ukraine in February, which caused oil prices to climb and exacerbated rising inflation in the wake of the pandemic. However, as was pointed out recently, fine wine has shown itself to be a strong hedge against inflation. 

On the one hand, therefore, an excess of sellers points to slowing market demand, on the other hand it can create opportunities for buyers who now hold a position of greater power over those wishing to sell stock. 

Opportunities to trade 

Head to the exchange to see over 16,000 LIVE bids and offers. 

Liv-ex analysis is drawn from the world’s most comprehensive database of fine wine prices. The data reflects the real time activity of Liv-ex’s 600+ merchant members from across the globe. Together they represent the largest pool of liquidity in the world – currently £100m of bids and offers across 16,000 wines. Independent data, direct from the market.