Forums
New posts
Forum list
Search forums
What's new
New posts
New resources
Latest activity
Trending Threads
Resources
Latest reviews
Search resources
FarmTV
Farm Compare
Search
Tokens/Searches
Calendar
Upcoming Events
Members
Registered members
Current visitors
New Resources
New posts
Log in
Register
What's new
Search
Search
Search titles only
By:
New posts
Forum list
Search forums
Menu
Log in
Register
Navigation
Install the app
Install
More options
Contact us
Close Menu
Forums
Arable Farming
Cropping
Crop Insurance Launched
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="CRM AgriCommodities" data-source="post: 5961638" data-attributes="member: 29580"><p>The 'policy' is based on the AHDB index price and not on Nov-19 Futures. As an example, the current quote for May-19 wheat is £5.57/T and the insurance kicks in at £153.95/T. The current AHDB index is trading at £171.46/T, this means that the index will need to drop by £17.51/T (171.46-153.95) between now and may before your insurance has a payout, the index then needs to reach the end of May-19 and be trading at £148.38/T to cover the initial premium. So all in the market (index) needs to drop £23.08 before it pays out. </p><p>The stable cover for November is £6.15/T and kicks in when the index has fallen £17.51/T.</p><p></p><p>It appears that new crop insurance is based on the old crop index. </p><p></p><p>As a comparison, an equivalent May-19 put option insurance which kicks in at £154/T is currently quoted at £0.15/T and has the same outcome. (<a href="http://www.barchart.com" target="_blank">www.barchart.com</a>)</p><p>A Nov-19 put option insurance which kicks in at after Nov-19 has dropped £17.51/T cost around £3/T. </p><p></p><p>Both protect price downside and mean that physical crop can be sold at a higher price if the market rises. The difference is the premiums and when the insurance kicks in, as well as when both policies can any gains can be claimed. </p><p></p><p>The AHDB ex-farm index is 'front month' so therefore new crop is being insured against an old crop index. As we approach harvest, old and new crop values will converge, its just whether old crop drops to meet new crop or new crop rises to meet old crop.</p></blockquote><p></p>
[QUOTE="CRM AgriCommodities, post: 5961638, member: 29580"] The 'policy' is based on the AHDB index price and not on Nov-19 Futures. As an example, the current quote for May-19 wheat is £5.57/T and the insurance kicks in at £153.95/T. The current AHDB index is trading at £171.46/T, this means that the index will need to drop by £17.51/T (171.46-153.95) between now and may before your insurance has a payout, the index then needs to reach the end of May-19 and be trading at £148.38/T to cover the initial premium. So all in the market (index) needs to drop £23.08 before it pays out. The stable cover for November is £6.15/T and kicks in when the index has fallen £17.51/T. It appears that new crop insurance is based on the old crop index. As a comparison, an equivalent May-19 put option insurance which kicks in at £154/T is currently quoted at £0.15/T and has the same outcome. ([URL="http://www.barchart.com"]www.barchart.com[/URL]) A Nov-19 put option insurance which kicks in at after Nov-19 has dropped £17.51/T cost around £3/T. Both protect price downside and mean that physical crop can be sold at a higher price if the market rises. The difference is the premiums and when the insurance kicks in, as well as when both policies can any gains can be claimed. The AHDB ex-farm index is 'front month' so therefore new crop is being insured against an old crop index. As we approach harvest, old and new crop values will converge, its just whether old crop drops to meet new crop or new crop rises to meet old crop. [/QUOTE]
Insert quotes…
Verification
Post reply
Forums
Arable Farming
Cropping
Crop Insurance Launched
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.
Accept
Learn more…
Top