Pre-harvest price protection without the risk of washouts
FlexiProtect offers pre harvest price protection to growers, to take advantage of volatility in international or domestic grain markets. If an opportunity presents, a Put Option will be purchased over a range of markets such as CBOT, Euronext (Matif), ICE (Winnipeg) and the Australian Stock Exchange (ASX).
FlexiProtect will provide downside price protection without the risk associated with SWAPS (futures trading) or a forward physical tonnage contract, whilst maintaining upside participation should the market rally.
Growers can commit up to 100% of their expected tonnage to FlexiProtect once they have entered into an Area Based Contract. Growers instruct Flexi Grain on the tonnage they seek to contract to FlexiProtect. The Put Option strategy is managed by Flexi Grain until expiry or sale of all Options.
When Flexi Grain identifies suitable opportunities to offer FlexiProtect, it will advise pool participants of the opportunity and seek commitment from participants.
Commitment is not compulsory and pool participants determine what level of price protection they seek up to a maximum equivalent to 100% of the estimated production from their contracted crop area.
The Put Option premium, management fee ($2.50/MT) and interest cost will be invoiced at the time of option execution in AUD/MT with post-harvest payment terms.
This invoice is payable on the 25th of February, should the proceeds from FlexiProtect not cover the invoice amount. Factors influencing the cost of the option premium include but are not limited to, market volatility, time to expiry and exchange rates.
100% of the equity from FlexiProtect, net of costs, will be distributed to the grower on or before the 25th of February.
Flexi Grain will provide updates keeping their clients informed of:
- Current strategy
- Market Drivers and updates