"I thought it about time we started looking at this market from a different
perspective."
We are all aware of just how difficult, volatile and impossible to predict this
market is becoming. Sure there are Merchant pools, Co-op pools, Farm group
pools, but at the end of the day we are relying on people we trust in the
selling of grains in an uncertain market place. With the use of pools we are
just shifting responsibility onto someone else who is just as likely to make a
sale that with hindsight may turn out to be poorly sold. There is but nobody
that can see what our wheat market is going to do. Furthermore with the
increase in share and managed farms those reporting to their owners or partners
will find it particularly stressful when explaining the year they misjudged
their grain selling.
We are putting together a guaranteed price reflecting the average of futures
trading for the whole year proceeding, as futures trade a year in advance. We
are able to offer this by simply tracking the futures for the whole of the
season. For those who follow the money markets it is interesting to note that
performance of these 'tracking funds' have over the last few years
out-performed the fund managers making individual decisions. It must surely be
attractive for those not wanting to go too far astray to put a percentage of
their crop against a guaranteed return of the average futures price for the
whole of the year, leaving the rest of the crop to gamble. I think it's
commonly called risk management. Please do not get confused with people saying
the HGCA is the average, as this is the average of Farm procurement filled in
by the trade and is generally a low figure.
The pool will be simply run and operated as follows :-
A grower will offer say 100 tonnes for November 2000, as of 1st October 1999 we
can commence tracking the futures and for every working day throughout 1999/
2000 up to the 15th October 2000 when a rolling average will be taken for the
whole of that period. The price will be announced, grain moved and payment on
25th December.
As an example we have completed year November 1999 average which would have
returned £71.52/ t for November '99' movement. This is simply taking the
rolling average from 5th Dec 1998 to 15th Oct 1999 for all futures trading over
the period. A grower near a good consumption point with good Riband would have
received net of all charges £76.52/ tonne, which you can say is the average
price of biscuit wheat for that period.
The fund is completely transparent; anybody can see the futures as they appear
in a number of publications such as the
Farmers Weekly
.
As part of the package the grower with 'lots' in the fund will receive regular
updates on tracking values, as well as graphs showing the seasonal track, with
a comparison of the previous seasons, so the fund level is always known.
The fund holder will have the opportunity to fix at any stage the tracking
price subject to a surrender value, as well as move his position both forward
and back, subject to any price agreements.
The fund may be entered at any stage although the tracking will commence on
uptake of 'lots' and it is considered prudent to secure the longest trading
period to attract the best average (not necessarily the best price).
The grower will be able to use the fund as a base for all types of wheat, as
premiums can be traded separately at any time through the season.
Terms:-
There will be a minimum tonnage offered: 50 tonne lots
Quality basis will be 72 Kgs, 15% Moisture, 2% Admix. Of course there will be
premiums attached for appropriate parcels as the seasons prevail.
Entry date: anytime.
Payment date: 25th of the month following contracted period
I trust this will create greater returns, in a safer environment, with a cost
effective way for all those in a dilemma as to the marketing of their grains.
Next step
Get Tracking!
To book up your wheat or oil seed rape please
email