Accumulators
An accumulator is a fixed deal, where every day a proportion of the committed tonnes comes into play, which is gradually fixed until the final date of the contract. The final quantity fixed by the accumulator will depend on the price movement during the estimated range. We will elaborate on this in details below
Accumulators
An accumulator is a fixed deal, where every day a proportion of the committed tonnes comes into play, which is gradually fixed until the final date of the contract. The final quantity fixed by the accumulator will depend on the price movement during the estimated range. We will elaborate on this in details below
Accumulators
An accumulator is a fixed deal, where every day a proportion of the committed tonnes comes into play, which is gradually fixed until the final date of the contract. The final quantity fixed by the accumulator will depend on the price movement during the estimated range. We will elaborate on this in details below
- If the price oscillates within the range, at the maximum of the range (accumulation price).
- If the price of the day exceeds the maximum of the range (accumulation price), double the daily tonnage is accumulated at the accumulation price.
- If the price of the day falls below the range (limit) that day is not fixed, and the daily tonnage is released.
The best performance of the strategy occurs if the market oscillates within the range, that is, in markets without large variations (sideways or horizontal). In that case every day it will be set at the maximum of the range, achieving a price that could not otherwise be obtained.
In the case of producers, it can be used as a way of averaging fixings above the current market. Regarding stockpiles, to generate a sold position higher than the market value, and buy in order to obtain a profit margin.
An accumulator can be made with Wheat, Corn and Soybeans in positions where there is volume.
- If the price oscillates within the range, at the maximum of the range (accumulation price).
- If the price of the day exceeds the maximum of the range (accumulation price), double the daily tonnage is accumulated at the accumulation price.
- If the price of the day falls below the range (limit) that day is not fixed, and the daily tonnage is released.
The best performance of the strategy occurs if the market oscillates within the range, that is, in markets without large variations (sideways or horizontal). In that case every day it will be set at the maximum of the range, achieving a price that could not otherwise be obtained.
In the case of producers, it can be used as a way of averaging fixings above the current market. Regarding stockpiles, to generate a sold position higher than the market value, and buy in order to obtain a profit margin.
An accumulator can be made with Wheat, Corn and Soybeans in positions where there is volume.
Useful concepts
Accumulation price
Value at which the daily volume accumulates if the reference contract on that day settles above the Limit Price. Of the two values shown on the contract it is the higher.
Multiplier
On days when the reference contract adjusts at or above the accumulation price, the tonnes set at the accumulation price will arise from multiplying the daily volume by this number.
Limit
Value below which the daily volume is not fixed, but remains to be fixed. Of the two values shown in the contract it is the lower.
Reference contract
Derivatives trading contract that is taken as a price reference to determine the daily position.
Expiration
Date on which the accumulator expires (coincides with the expiry date of options).
Daily volume
Tonnes agreed / business days until expiry of the accumulator.
Position
Date of actual delivery of the goods.
Total volume
This is the agreed tonnes: it can be doubled.
Value at which the daily volume accumulates if the reference contract on that day settles above the Limit Price. Of the two values shown on the contract it is the higher.
On days when the reference contract adjusts at or above the accumulation price, the tonnes set at the accumulation price will arise from multiplying the daily volume by this number.
Value below which the daily volume is not fixed, but remains to be fixed. Of the two values shown in the contract it is the lower.
Derivatives trading contract that is taken as a price reference to determine the daily position.
Date on which the accumulator expires (coincides with the expiry date of options).
Tonnes agreed / business days until expiry of the accumulator.
Date of actual delivery of the goods.
This is the agreed tonnes: it can be doubled.
- Suppose that on February 4th of 2019 a producer sells 200 tt of corn in the accumulator Dec-19.
- From the moment he makes the contract until maturity there are 196 days in which the accumulator is in force.
- Daily volume = 1.02 tt (200 tt. \196 days)
- With this strategy the producer can be sold at a firm price from 0 to 400 tt (0 tt if as soon as the strategy is carried out the price of Dec-19 corn is below the limit price for the duration of the contract and 400 tt as soon as the strategy is carried out the price of Dec-19 corn is above the accumulator price for the duration of the contract.
- Daily from the contract date until maturity.
- If the reference position’s adjustment price is below the limit, no accumulation is made on that day. The proportional tonnage for that day remains in a contract to fix.
- If the reference position’s adjustment price is above the limit and below the accumulation price, it is accumulated to the accumulation price.
- If the reference position’s strike price is above the accumulation price, double the tonnage is accumulated at the accumulation price.
- Suppose that on February 4th of 2019 a producer sells 200 tt of corn in the accumulator Dec-19.
- From the moment he makes the contract until maturity there are 196 days in which the accumulator is in force.
- Daily volume = 1.02 tt (200 tt. \196 days)
- With this strategy the producer can be sold at a firm price from 0 to 400 tt (0 tt if as soon as the strategy is carried out the price of Dec-19 corn is below the limit price for the duration of the contract and 400 tt as soon as the strategy is carried out the price of Dec-19 corn is above the accumulator price for the duration of the contract.
- Daily from the contract date until maturity.
- If the reference position’s adjustment price is below the limit, no accumulation is made on that day. The proportional tonnage for that day remains in a contract to fix.
- If the reference position’s adjustment price is above the limit and below the accumulation price, it is accumulated to the accumulation price.
- If the reference position’s strike price is above the accumulation price, double the tonnage is accumulated at the accumulation price.
Day 0: The producer sells 200 tt of corn of Dec-19 in the reference accumulator.
This procedure is carried out daily until day 196 as there are that many days of accumulation. At the end of that period the producer will know what tonnage he has sold at price and at fix.
In our example, the producer sold at $157 215.3 tt of corn and sold 130 tt at the fixed per purchasing market
Day 0: The producer sells 200 tt of corn of Dec-19 in the reference accumulator.
This procedure is carried out daily until day 196 as there are that many days of accumulation. At the end of that period the producer will know what tonnage he has sold at price and at fix.
In our example, the producer sold at $157 215.3 tt of corn and sold 130 tt at the fixed per purchasing market
Day 0: The producer sells 200 tt of corn of Dec-19 in the reference accumulator.
This procedure is carried out daily until day 196 as there are that many days of accumulation. At the end of that period the producer will know what tonnage he has sold at price and at fix.
In our example, the producer sold at $157 215.3 tt of corn and sold 130 tt at the fixed per purchasing market
Advantages
- If the reference price is trading within the Accumulation Price – Limit You can sell at a price above the market value.
- It is a good strategy if the market is sideways.
Disadvantages
- We are not assured of selling at the accumulation price.
- We can be sold at double of the committed tonnage. This is important in years when we may have production losses.
- Even if we cannot sell at the price, the producer is committed to deliver the tonnage of the contract to be fixed.
Advantages
- If the reference price is trading within the Accumulation Price – Limit You can sell at a price above the market value.
- It is a good strategy if the market is sideways.
Disadvantages
- We are not assured of selling at the accumulation price.
- We can be sold at double of the committed tonnage. This is important in years when we may have production losses.
- Even if we cannot sell at the price, the producer is committed to deliver the tonnage of the contract to be fixed.
Advantages
- If the reference price is trading within the Accumulation Price – Limit You can sell at a price above the market value.
- It is a good strategy if the market is sideways.
Desventajas
- We are not assured of selling at the accumulation price.
- We can be sold at double of the committed tonnage. This is important in years when we may have production losses.
- Even if we cannot sell at the price, the producer is committed to deliver the tonnage of the contract to be fixed.