| Chilling Degree Hours
Business Situation
Though it is common knowledge that many crops are negatively impacted by cold temperatures,
many of the same crops can benefit and thrive from cold temperatures in moderation.
For flowers and leaf buds to develop normally on stone and pome fruit trees, they
rely on having enough chill hours to start the process of going from winter dormancy
to spring bloom. This can have the effect of delaying foliation, and reducing
fruit quantities and quality. Producers and processors track the number chilling
hours during the Fall/Winter season to have an estimate of the yield and potentially
identify needed changes in crop maintenance activities.
"We actually need more chilling hours for the fruit and nut trees," said
Roger Duncan, a University of California farm adviser. "Almond trees are looking
better, but the fruit trees really need another 150 hours of cold." (complete article)
Chilling Degree Hours Models
David Byrne (Dept. Of Horticultural Sciences, Texas A&M University) has researched
the potential impacts chilling has on various crops and has developed a model to
estimate and count Chilling Degree Hours.
There are three widely accepted models used to estimated the number of Chilling
Degree Hours that have occurred -- each requires hourly weather observations for
the region being measured. For this scenario, we have chosen to use the Utah
Model since it includes relative chilling effectiveness and negative chilling accumulation.
Utah Model
1 hour below 34 degrees F =0.0 chill unit
1 hour 35-36 degrees F =0.5 chill units
1 hour 37-48 degrees F =1.0 chill units
1 hour 49-54 degrees F =0.5 chill units
1 hour 55-60 degrees F =0.0 chill units
1 hour 61-65 degrees F =-0.5 chill units
1 hour >65 degrees F =-1.0 chill units
Solution
To manage the negative impact that could result in a winter that did not have enough
Chilling Degree Hours, we structured a solution that uses the Utah Model to protect
a crop of Yellow April Glo Nectarines. The optimal Chilling Degree Hour range
for the chilling season for the Yellow April Glo Nectarine is 200-300 hours.
|
Period: |
11/1/2002 till 4/31/2003 |
|
Measurement (Event): |
Chilling Degree Hours |
|
Option Type: |
Put |
|
Strike: |
Chilling Degree Hours <=200 hours |
|
Tick: |
$5,000 per event |
|
Limit: |
$500,000.00 |
|