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Ok. Can anyone help me out here.
I grow ag commodity X. I know the planting start date for X and when it is harvested.
Currently if I enter into and agreement to grow X I have to lock in price now and total volume (like a forward contract). If I dont produce that many tons? 1/
I grow ag commodity X. I know the planting start date for X and when it is harvested.
Currently if I enter into and agreement to grow X I have to lock in price now and total volume (like a forward contract). If I dont produce that many tons? 1/
Then I have to & #39;make good& #39; on the shortfall yes?
Let& #39;s go numbers. Imagine X is like the wheat we& #39;ve just sown. I could grow 6T/ha or 0 so I go with 3T/ha forward contract. APW1 price is $250 / T today. So its $750 / ha income lock in for December. But! 2/
Let& #39;s go numbers. Imagine X is like the wheat we& #39;ve just sown. I could grow 6T/ha or 0 so I go with 3T/ha forward contract. APW1 price is $250 / T today. So its $750 / ha income lock in for December. But! 2/
Lets imagine wheat is like X.
All the commodity marketing experts say the price is going to be over $835 / T in December when the contract are being completed. But I& #39;m locked in at $250 for 3T
So if there& #39;s a problem during the growing season, say a disease or rainfall issue 3/
All the commodity marketing experts say the price is going to be over $835 / T in December when the contract are being completed. But I& #39;m locked in at $250 for 3T
So if there& #39;s a problem during the growing season, say a disease or rainfall issue 3/
So the yield is only 1.5T/ha. My forecast $750/ha income actually $375 and I now have to make good on 1.5T/ha at current price of $835 = $1,252.5
In other words net income -$877.5 for the pleasure of growing $1.5/ha of wheat, plus all my production and over head costs!
Fark! 4/
In other words net income -$877.5 for the pleasure of growing $1.5/ha of wheat, plus all my production and over head costs!
Fark! 4/
If Government came to me with a proposal that the only way to market wheat was under such terms, I& #39;m pretty sure I& #39;d say a few rude things.
Yet product X works that way, plus it& #39;s growing season is 25 years, plus it changes the land development options permanently! 5/
Yet product X works that way, plus it& #39;s growing season is 25 years, plus it changes the land development options permanently! 5/
Now I know wheat at $835/ T is a silly price yes?
But the ratio is right for product X, 250:835 is the same ratio as today& #39;s & #39;commodity X& #39; price in Aus to the minimum it& #39;ll have to be at in 25 years.
You& #39;d be an insane wheat grower to lock into the market today right? 6/
But the ratio is right for product X, 250:835 is the same ratio as today& #39;s & #39;commodity X& #39; price in Aus to the minimum it& #39;ll have to be at in 25 years.
You& #39;d be an insane wheat grower to lock into the market today right? 6/
Ok so if you got this far in the thread you& #39;d have picked that commodity X is vegetation sequestration of carbon on farm, right.
So #AUSAG. Please help me. Why the hell would I sell our farm sinks from vegetation in this carbon market with these conditions?
Why? What upside?
So #AUSAG. Please help me. Why the hell would I sell our farm sinks from vegetation in this carbon market with these conditions?
Why? What upside?
Help me out.
And this isn& #39;t policy. This is a peasant looking at this area right here and trying to crunch numbers and read reports and struggling to make sense.
@DillonCreek @VMorganSchmidt @SoilCarbonCo @CarbonBubble @agrarianliberty @CoreyBlacksell @BrisvegasAJF @cropmad
And this isn& #39;t policy. This is a peasant looking at this area right here and trying to crunch numbers and read reports and struggling to make sense.
@DillonCreek @VMorganSchmidt @SoilCarbonCo @CarbonBubble @agrarianliberty @CoreyBlacksell @BrisvegasAJF @cropmad
Cause I run a few things through @CSIRO https://looc-c.farm/ ">https://looc-c.farm/">... and the physical makes sense.
But I look at the market terms and likely future price of minimum $50 a ton https://www.afr.com/policy/energy-and-climate/270-carbon-price-tag-required-for-net-zero-emissions-20200224-p543ra">https://www.afr.com/policy/en...
Then surely due diligence says I cannot go any near the deals on the table now...?
But I look at the market terms and likely future price of minimum $50 a ton https://www.afr.com/policy/energy-and-climate/270-carbon-price-tag-required-for-net-zero-emissions-20200224-p543ra">https://www.afr.com/policy/en...
Then surely due diligence says I cannot go any near the deals on the table now...?
