Via Agrifirm contract
Turmoil on Matif fuels interest in trade
In May of this year, Agrifirm Plant introduced the Guarantee Plus contract. This allows a wheat grower to trade on the futures market in Paris. The commotion that arose on the Matif a few weeks ago has also fueled interest in this sales form.
The current price level for wheat serves as a floor for the Warranty plus contract† The March 2018 futures contract on the Matif in Paris is then used as the instrument. If the price is above the level of the physical delivery price, you can click as a participant. The difference, minus a premium, is paid out by Agrifirm. How much premium you have to pay depends on the price level. In contrast to the potato futures market, physical delivery of the wheat to Agrifirm is mandatory. 1 contract covers a volume of 50 tons.
Join the market
"A grower who normally sells his wheat during the harvest can now also do that," explains Arco Amperse of Agrifirm Plant. "The participant is paid the daily price immediately upon delivery. The price level during the harvest is often not at its highest level. With the Guarantee Plus contract, the grower has the advantage that he can still participate in the market throughout 2017-2018. Decreases the futures market contract, then this has no consequences."
Interested in price increases
The new form of trade for wheat started this spring, but only in the past month did the company show serious interest. "The market started to move about 4 weeks ago. At that time, interest was aroused, which is of course a logical consequence," says Amperse. "At the moment, the futures market price is falling again. This could be a good time to step in. If there is a mood on the world market later in the season, you can take advantage of this."
Gain experience with futures market
The Guarantee Plus contract mainly attracts growers who previously sold their wheat on day trade. "Pole growers stay with the grain pool. As a farmer you have to enjoy trading. We see growers who sell their potatoes in this way also joining in," says the Agrifirm man. "Not only Agrifirm relations, but also new growers apply. The contract makes the futures market accessible. It is often the larger arable farmers who join. It is often decided to sell part of the total volume via this route. Last year we already had a season with a test group. We learned a lot from that. There is quite a lot of interest, but growers first have to gain experience."
Only wheat
According to Amperse, such a sales method is possible for every grain type that has a futures market. However, the company has no plans for the time being to come up with a futures contract for other grains as well. Amperse: "Wheat is by far the largest cereal crop and the most suitable. The physical product flow that underlies this is also crucial for us."
Niels van der Boom
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.