New Agrifirm contract
Wheat grower can score with futures market
Agrifirm Plant is introducing a new form of sales on the wheat market for the 2017 harvest: the Guarantee Plus contract. Growers can use the Matif futures market in Paris to score a plus on top of the guaranteed price.
According to Agrifirm, the Guarantee Plus contract offers the opportunity to benefit from a higher price level on the futures market in Paris. The current price level at the time of physical sale serves as the floor. If the futures market price is higher, it can be "clicked". The difference is paid out and that is the plus. However, a premium has to be paid for the price floor. In its own words, Agrifirm is the first provider in the Netherlands that makes it possible to use the futures market as a price instrument.
Premium on plus from futures market
In addition to a possible plus in the sales price, the grower is in control. According to the company, the Matif's May contract is ideal for this. After selling the wheat and paying the premium, no more costs are collected. That is the case with the grain pool. The price will never be lower after choosing your moment of sale.
The futures market contract has a physical delivery obligation. Trading without cultivating yourself is therefore not an option. Prior to the harvest, a price agreement is made for the delivery of the wheat. At the same time, the forward supply contract is concluded. During and after the harvest, the contract, combined with a daily price agreement, can also be entered into.
50
your
Trade until April 28th
The Guarantee Plus contract is currently only available for wheat. A maximum of 100 percent of the volume can be contracted in units of 50 tons. The standard terms and conditions that Agrifirm Plant normally uses for wheat apply to the delivery.
After the wheat has been sold to Agrifirm for the daily price, the futures market comes into effect. You have until April 28, 2018 to cash in on the plus that the futures market may create. This is comparable to a potato click contract. If the futures market falls below the selling price, this has no consequences. After all, you have already established the bottom in day trading.
Variable premium
The premium you pay for the price floor is variable and depends on the price level. In the calculation example, this amounts to 12,50 euros per tonne with a sales price of 160 euros per tonne. These costs are deducted directly at the time of sale. If the Matif was at 170 euros at the time of sale, it is important to get out when this is at least 182,50 euros. Otherwise, the premium cannot be recouped (in this calculation example). Anything above that is the plus that generates the contract.
Niels van der Boom
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