Crop Insurance Launched

AndyBridgeFarm

New Member
Location
Somerset
He was looking for trends I think, but the down corn up horn was the one that inspired him I believe, and by getting other sectors of Ag to use price insurance it spread the risk. To use a non Ag commodity it would require the producer of that commodity wanting to take out price insurance. By default that would require a choppy uncertain market else why would you want price insurance, it is a product for primary producers only, so big mining firms probably don't fit the bill (last bit I'm not sure on) just remembering what he said at the Sentry Conference.

C B
Judging by today's FW he's now launched Stable - it seems live on his site too.
 

Clive

Staff Member
Location
Lichfield
If it lives up to the hype, it’s a massive game changer. Good on him!
I agree

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 !
 

AndyBridgeFarm

New Member
Location
Somerset
I agree

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!!
 

Clive

Staff Member
Location
Lichfield
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 !
 

AndyBridgeFarm

New Member
Location
Somerset
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!
 
Location
UK
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!
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.
 

AndyBridgeFarm

New Member
Location
Somerset
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.
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!
 

Clive

Staff Member
Location
Lichfield
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!
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
 

turbo

Member
Location
lincs
The difference between import parity & export parity is around £10/t. Yes, you'll get a wider spread when ocean freight rates are higher but it costs the same per tonne to get a 50,000t boat across the Atlantic in 4 days as it does to get a 29t artic 4 hours up the road. My malting barley is currently going 4 hours to Norfolk to be malted then another few hours to the brewery. If it was low enough in N it would be heading up to Scotland for whisky. The east/west spread is over £10/t i.e a West country feed mill has to pay at least £10/t more than one in Cambs. That's why there aren't many registered LIFFE futures stores in the west.

Where is the 2mmt of wheat no longer required by the ethanol plants going? That's 12% of the UK harvest demand gone. It's starting to look like it didn't exist in the first place. Interesting times. (y)
It was only 1m that they needed and they have never got close to full capacity!
 

AndyBridgeFarm

New Member
Location
Somerset
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.
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.
 
Location
UK
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
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')
 

AndyBridgeFarm

New Member
Location
Somerset
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
Indeed.
 

Clive

Staff Member
Location
Lichfield
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.

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 ? !!
 

crazy_bull

Member
Location
Huntingdon
Where is the 2mmt of wheat no longer required by the ethanol plants going? That's 12% of the UK harvest demand gone. It's starting to look like it didn't exist in the first place. Interesting times. (y)

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.

C B
 

Clive

Staff Member
Location
Lichfield
Ha! Like your style - think I'll leave my gambling to the National!
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
 

AndyBridgeFarm

New Member
Location
Somerset
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!
 

Forum statistics

Threads
156,205
Messages
3,573,664
Members
39,573
Latest member
Cat37913

Events

Melpash Show
West Bay Road, Bridport, Dorset
W Bay Rd, Bridport DT6, UK
Big Feastival
Near Kingham, Oxfordshire
Kingham, Chipping Norton OX7, UK
Top