A managed pool that provides a 90% distribution during harvest whilst maintaining exposure to the market via an Option strategy
FlexiOption is designed to increase cashflow at harvest, whilst providing post-harvest market exposure via an Option strategy.
Rather than carrying grain, it will be sold at or near harvest, locking in a floor price and saving storage fees.
From the proceeds of the sale, Flexi Grain will purchase options that will aim to capture any post-harvest volatility, unlike carrying unhedged grain.
This pool will trade until the end of August, with the final distribution on or before the 25th of September.
A minimum of 50% and a maximum of 100% of the pool can be replaced with options at the time of the grain being sold. Pre harvest sales can take place (demonstrated in the below chart) when the pool manager sees it as optimal price risk management.
Counterparties will be ranked in terms of credit risk, with credit insurance taken out on counterparties failing to meet Tier 1 classification.
FlexiOption offers growers 90% of the Estimated Pool Return on the 10th or 25th of the month, post title transfer. 100% of the remaining equity distributed on or before the 25th of September. Payments will be accompanied by a Receipt Created Tax Invoice (RCTI) and a payment advice.
Flexi Grain’s management fee is $7.50/MT (ex GST) and this will be deducted from the first pool distribution / advance. Additional Pool management costs may include, but are not limited to, yield estimates, grain receival, transport, transfer, storage and insurance, counter party risk insurance, special risk and inventory insurance, outturn, handling, grading, shrink, service fees, brokerage, finance, interest, royalties and statutory levies.
Final Pool Return
The final pool return will be calculated and communicated on a Port Basis or Free in Store net of all costs. Site & time of entry indexing will be applied if applicable.
Flexi Grain will provide updates keeping their clients informed of:
- Current strategy
- Market Drivers and updates
- Estimated Pool Return
- Equity Statements