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Discussion in 'Cropping' started by AndyBridgeFarm, Feb 8, 2019.
Judging by today's FW he's now launched Stable - it seems live on his site too.
Official launch is in London early March iirc - I’m going down to see what it’s all about so will report back on TFF !
If it lives up to the hype, it’s a massive game changer. Good on him!
I do find it interesting psychology though ...... mention the word option or futures to most farmers and they will run a mile
Call it insurance and they are happy to pay for such security !
We have all been able to buy grain price insurance for decades - most don’t though !
Interesting point on the psychology. I suppose the difference is that Grain insurance is about protection from damage and many farmers are just willing to wing it as damage happens sporadically, whereas you're always going to sell your grain, so insuring it from a price drop means you can protect yourself from the downside while ensuring you benefit from the upside. Might help secure a bank loan to buy a new drone!!
Options have offered that for decades
But farmers are sacred / don’t understand them .......... and of course all know someone that lost their farm to potato futures !
Call an option insurance and it’s all ok though !
From what I can see though, the only outlay risk with Stable is the actual insurance premium. Like insuring your car I suppose. Options have Put Options which scared the bejesus out of me. I'm a farmer, not a banker!
Well, farmers are the ultimate gamblers! Betting on prices being good by planting and not fixing any until after it has been harvested. That’s taking a long position.
An option is simply insurance, your maximum loss/ outlay is your premium paid upfront, then you either claim on the insurance if the market falls (put option) or the insurance expires worthless and you have no further obligation. as @Clive says they have been used for decades by farmers around the world. As an example, a 'put option' to insure new crop wheat from further price falls between now and November -19 currently costs £9.50/T roughly £1/t per month, if it gets to November and prices are at £200/T then all you lose is the £9.5/T and you are free to sell your grain at £200 or hold it for a later sale. Farmers can open a demo account with someone like Saxo bank (https://www.home.saxo/en-gb) and see how simple purchasing this insurance is.
True! I suppose we don't have to gamble any more though, which will come as a massive relief to some of us that want to get some sleep at night!
the only cost of a option is the option cost, nothing to be scared of (its far more risky just hoping for a price!) - for a primary producer it's minimum price insurance plain and simple not unlike what Stable are gong to offer (I expect the "premiums" they will offer will simply be backed by option / future positions)
changing the name of it seems to seriously change the psychology it seems
It was only 1m that they needed and they have never got close to full capacity!
As I said, I'm a farmer, not a banker or a trader. Just those trading screens on their own make me go cross-eyed! The insurance route seems simpler on the face of it. I just got a quote on the Stable site - took 2 mins.
The ultimate test will be how competitive Stable's insurance premiums are relative to option premiums. It's a great concept as long as it is price competitive! The other main difference is that any gains on options can be taken at any point between purchasing the option (insurance) and its expiry, whereas the Stable policy will be paid out only at the insurance expiry (this is known in the industry as a 'European Option')
Demo account on three gives you 100K to play with
how abut we have a TFF challenge ? all open an account and see who has anything left 12 months from now ? !!
Ha! Like your style - think I'll leave my gambling to the National!
Ensus was running on mostly imported gear so was actually displacing feed stuffs as remember something like 2/3rds of what goes in comes out as DDG's etc.
Northern premiums have shrunk right back though.
I just gone long on wheat it's not gambling when its other peoples money !
seriously you shroud give it a try with a demo account - even if you never have any intention of trading futures or opinion for real with actual money its a great way to learn how it all works
May do that although I have to say I am far more comfortable with insurance from a business point of view. I'll set up a dummy account though as you suggest - this time nest year Rodders, we'll be miwionairs! Or I will have lost the lot!