Capped soya will offer better deal
A NEW capped-price contract from Banks Cargill aims to minimise the risk of purchasing soyameal in an increasingly unpredictable market.
The capped average contract will set a maximum price, while allowing farmers to benefit should the market fall.
The price will be set on the day the contract is opened, when values based on Chicago futures are realistic and options are cheap, says Banks Cargill trader Hugh Shedden.
"The very high level of volatility in the proteins market over the past few years has created a need for a new type of contract to reduce the price risk taken by farmers," he adds.
The contract will operate as a pool, guaranteeing a maximum price for up to 15 months in advance of delivery, at a cost of £5-6/t.
Chicago daily futures values will be used throughout the period to give an average price of the pool. If this is lower than the guaranteed level, the purchaser will be refunded the difference. *