Automatically Take Advantage of Seasonality
March 16, 2022
In a volatile soybean market, the Average Seasonal Price (ASP™) contract can help lower stress levels.
Rather than settle for the current market price, you can often achieve strategic price targets by using this unique contracting mechanism to establish your futures reference price. If prices go higher, you may sell additional bushels and if prices go much lower, pricing activity may stop altogether or trigger a minimum guaranteed futures reference price.
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How it Works
Price Accumulator contracts offer the choice with a guaranteed minimum futures reference price (Guaranteed Price Accumulator) or without a guaranteed minimum futures reference price (Non-Guaranteed Price Accumulator). With both, you also get to choose whether you prefer the double-up feature to occur on a daily basis, or one time—on the final pricing day. In either case, your contracted bushels to be delivered will never be less than the original quantity or more than two times the original quantity.
Here’s how to put Price Accumulator to work for you:
Benefits
Details
With the Non-Guaranteed Price Accumulator contract, Accumulation Levels and Knock-Out Levels are defined.
Daily Double-Up Feature
If the underlying futures market settles above the Knock-Out Level, at or below the Accumulation Level, one times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles above the Accumulation Level, two times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles at or below the Knock-Out Level, pricing stops. All priced quantities will be applied toward the original contract quantity and any unpriced balance will remain unpriced by the formula, but must be priced prior to delivery.
One Time Double-Up Feature
If the underlying futures market settles above the Knock-Out Level, one times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles at or below the Knock-Out Level, pricing stops and the one time double-up feature expires. All priced quantities will be applied toward the original contract quantity and any unpriced balance will remain unpriced by the formula, but must be priced prior to delivery. If the contract hasn’t knocked out, and on the final pricing day, the market settles above the Accumulation Level, an additional set of bushels, equal to the original quantity, will be priced at the Accumulation Level on that day.
How it Works
Price Accumulator contracts offer the choice with a guaranteed minimum futures reference price (Guaranteed Price Accumulator) or without a guaranteed minimum futures reference price (Non-Guaranteed Price Accumulator). With both, you also get to choose whether you prefer the double-up feature to occur on a daily basis, or one time—on the final pricing day. In either case, your contracted bushels to be delivered will never be less than the original quantity or more than two times the original quantity.
Here’s how to put Price Accumulator to work for you:
Benefits
Details
If you wish, you can add a Guaranteed minimum futures reference price to the Price Accumulator contract. In this option, if the futures market ever settles at or below the Knock-Out Level, any remaining daily pricing quantities will be priced at the Guaranteed price level. The Knock-Out, Guarantee, and Accumulation Levels will all be defined.
Daily Double-Up Feature
If the underlying futures market settles above the Knock-Out Level, at or below the Accumulation Level, one times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles above the Accumulation Level, two times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles at or below the Knock-Out Level, any remaining daily pricing quantities will be priced using the Guarantee Level.
One Time Double-Up Feature
If the underlying futures market settles above the Knock-Out Level, one times the daily pricing quantity will be priced at the Accumulation Level on that day. If the market settles at or below the Knock-Out Level, the one time double-up feature expires, and any remaining daily pricing quantities will be priced using the Guarantee Level. If the contract hasn’t knocked out, and on the final pricing day, the market settles above the Accumulation Level, an additional set of bushels, equal to the original quantity, will be priced at the Accumulation Level on that day.
The Formula
How It Works
Benefits
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