Short-Term Weather Protection
8/27/2009
Top Producer has reported exchange-traded “Weather Contracts” when they were first announced. This year’s delayed planting and immature crops give them new attraction. They let you protect against profits from an early or even normal freeze. This is not a form of crop insurance. It is designed to pay out based on reported weather, not crop damage based on human assessment.
Jerry Gulke of Strategic Marketing Services lists the following highlights of these weather contracts.
- No claims process or proof of loss. No statement of crop, acreage, etc.
- No limitations or exclusion.
- Immediate payment without proof of loss.
- Can buy at anytime up to 15 days before risk period.
- Can be customized by location, dates of risk, temperature risk, level of revenue guarantee and amount of acreage covered.
- Contract price based on the likelihood that adverse weather will occur based on historical data.
- Weather commodity products have been utilized on the CME since about 1989 and are mainly used by large energy companies to hedge risk--mainly in temperature.
- These customizable products can also be used drought, flood protection, uninsured crops, planting delays, crop maturity.
For More Information
Jamie Weismuller of Strategic Marketing Services at 707-365-0601.
