July 1, 2022 (Silver Spring, MD, and Chicago) – Stable announces the execution of the first ever over-the-counter option contract to protect against volatile organic soybean prices. According to price reporting from Mercaris, organic soybeans have increased 62% compared to just one year ago. This historic volatility has heightened the need to protect against downside and upside price changes.
The first organic soybean transaction contract will be settled using the Mercaris Midwest Organic Soybean Price Index, which reflects organic soybean cash market prices across a six state region of the U.S. where the majority of organic soybeans are grown.
“Stable is excited to see the early results of our partnership with Mercaris during these unprecedented times in agriculture markets,” says Jim Sullivan, VP Partnerships at Stable. “This marks the first time in history that price protection was made possible in organic soybeans, an unlisted agricultural commodity for which there was previously no way to effectively manage price risk. The mix of growing demand and heightened volatility in soybean markets underscores the need for the type of risk management that Stable is delivering to our agricultural and food business customers across the supply chain.”
Because organic grains are not traded on any public exchange, the price risk management methods available to everyone from farmers to feed mills have been limited. That has changed with Stable’s simple and targeted options-based risk management solutions that settle directly against reference prices published by entities such as Mercaris.
“Robust, reliable price data for organic grains is the foundation for innovative tools that enable better price risk management,” says Kellee James, Founder and CEO of Mercaris. “The impacts of climate change and other social, political and environmental challenges amplify the usual fluctuations of supply and demand. Our mission is to support better decision-making to help our partners meet those challenges”.
To view additional viewpoints from Kellee on this exciting news, please view her latest LinkedIn post.
Organic soybean options are one of several contracts offered to help manage price risk for organic crops. For more information about hedging price risk, please contact Stable. For information on Mercaris’ organic grain price indexes we welcome you to visit www.mercaris.com.
