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East of Broken Bow | Good read.
I never liked accumulators because you don't know how much you'll be obligated to deliver until you are either notified you have to or you don't, and you can miss opportunities for those bushels because you don't want to over sell them.
The other thing I do not like about accumulators can be summed up by the market move a couple years ago in corn.
Elevator was pushing accumulator contracts at around $5.50, which at the time was not a bad price. However, had you signed up for that, you would have then been obligated to deliver double your original amount at a time when the cash price was closer to $7. Basically, you are limiting your upside in the future in order to gain a few pennies today. In a falling market, they probably work pretty well, but in a rising market, they limit your upside. | |
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Accumulators - A Rant
