STRATEGIC GRAIN MARKETING Accumulator Contracts:
Robb Conroy Lead Grain Advisor - East
Additionally, CFS will soon begin sign-ups for our 2025 Market Advantage and Average Price contracts. These contracts offer a great way to diversify your marketing strategy, providing you with multiple tools to manage your bushels effectively. To explore how these options can fit into your grain marketing plan, we encourage you to reach out to a CFS grain marketing advisor today.
Corn Dec 25 Producer - Weekly Accumulator with Euro Double-Up & Gtd Qty
Corn Dec 25 Producer - Weekly Accumulator with Euro Double-Up
An accumulator contract is a strategic tool that allows grain producers to lock in a higher selling price above the current market level. This type of contract operates with two key price points: the accumulation price, set above the market, and the knockout price, set below. If the futures price dips below the knockout price, the contract automatically ends, leaving the producer to manage any remaining unsold bushels. Some contracts offer a safety net in the form of a guaranteed minimum price for these unsold bushels, essentially acting as a floor price in the event of a knockout. The contract runs over a defined period, during which incremental amounts of grain are sold, typically either daily or weekly. However, as beneficial as they can be, accumulator contracts also come with inherent risks. One such risk is the possibility of being required to deliver twice the amount of grain at the accumulation price, known as the “double-up” risk. Therefore, it's crucial to use these contracts thoughtfully, limiting the amount of grain involved and ensuring they align with your broader marketing strategy. At CFS, we offer a variety of customizable accumulator contracts to suit individual producer needs, helping you manage your risk. Below are examples of two types of contracts, each designed to offer flexibility and protection.
Corn Dec 25 Producer - Weekly Accumulator with Euro Double-Up & Guaranteed Quantity Board Price: 4.5375 Pricing Period: 10/04/2024 to 11/21/2025
Accumulation Level: 4.7500 Knock-Out Level: 3.,8975 Double-Up Level: 4.7500 Guaranteed Level: 4.5375
Contract Details: Every day the contract settles above the Knock-Out Level (3.8975), 100% of the daily notional quantity is priced at the Accumulation Level (4.7500). If the Knock-Out level trades or is breached to the downside, further accumulations and the Double-Up risk cease. Any bushels already accumulated will remain. The remaining accumulations are priced at the Guaranteed Level (4.5375). At expiration, if the contract settles above the Accumulation Level (4.7500) and a knock-out has not occurred, an additional 100% of the notional quantity is priced at the Accumulation Level (4.7500).
Corn Dec 25 Producer - Weekly Accumulator with Euro Double-Up Board Price: 4.5375 Pricing Period: 10/04/2024 to 11/21/2025 Accumulation Level: 4.9225
Knock-Out Level: 4.0550 Double-Up Level: 4.9225
Contract Details: Every day the contract settles above the Knock-Out Level (4.0550), 100% of the daily notional quantity is priced at the Accumulation Level (4.9225). If the Knock-Out level trades or is breached to the downside, further accumulations and the Double-Up risk cease. Any bushels already accumulated will remain. At expiration, if the contract settles above the Accumulation Level (4.9225) and a knock-out has not occurred, an additional 100% of the notional quantity is priced at the Accumulation Level (4.9225).
Made with FlippingBook - professional solution for displaying marketing and sales documents online