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68340 | Interesting program I was told about by Cargill.
Called Pacer Accumulator Plus.
Maybe you know all about it.
Goes like this.
A contract of say 5,000 bu is divided by a specific number of marketing day.
Example 6-4-07 to 10-3-07. Something like 80 marketing days.
5000 / 80 = 62.5 bu / day
Price 7.99 (called the pivot price) and 9.17 ( do not know what they call this number)
Today's market price for Jan 08 beans is 8.51.
We have a .70 basis here currently for Jan 08 bean delivery. So my cash price today for Jan beans is 7.81.
Anyway. I will be paid 9.17 for 62.5 bu of beans each day until 10-3-07. If the market ever trades the pivot price (7.99) the contract is stopped and I need to market the remaining unsold beans on my own or a different program. So let us say the market went 35 market days before it traded 7.99. I would have 62.5 bu x 35 = 2,187.5 bu beans sold for 9.17 - .70 basis = 8.47
Now it gets more interesting. If we go the entire time without the pivot price, (7.99) being traded I will be required to deliver DOUBLE the quantity of my contract. Here it would be 10,000 bu instead of 5,000. I will receive 9.17 for the full 10,000 bu.
Have you done any of this?
So Cargill is paying me .66 more for my beans in this contract above today's Jan market price.
What does Cargill know that we do not ? Why are they paying a .66 premium ? Looks to good to be true ???
Edited by billybob 6/2/2007 12:08
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$8.00 fall Soybean picked up at the Farm
