CONTRACTS WE OFFER

Sell grain at today’s cash price for nearby delivery.

• Advantages
  • The exact price is known
  • Ability to move grain in short time period
  • Cover nearby cash needs
• Disadvantages
  • Risk of missed opportunity in the market for higher cash price
• Best time to Use a Spot Cash Sale
  • When basis is stronger than normal
  • When cash flow is needed

Producer sells a specific quantity of grain for a specified cash price for a delivery at a later date.

• Advantages
  • The exact price you will receive for your grain is established
  • The exact quantity of grain to deliver is established
  • The Date of delivery is established
  • Downside price risk is eliminated
• Disadvantages
  • Upside price potential is eliminated for the quantity you contracted
  • Contract must be filled even in the case of production shortfall
• Best Time to Use a Forward Contract
  • When the Cash price is at an acceptable profit
  • When basis is stronger than normal
  • When you expect prices to fall
  • When you expect supply to be very high (example: harvest)

Producer sells a specific quantity of grain by locking in the basis (difference between CBOT and our cash bid) for delivery at a later date.

• Advantages
  • Quantity and Delivery period for exact bushels are established
  • Producer eliminates risk of basis widening out
  • Opportunity to lock in a higher cash price at a later date if market rises
• Disadvantages
  • Producer assumes price risk until futures price is locked in
  • Opportunity for basis improvement is eliminated
• Best Time to Use a Basis Contract
  • When a price rise is expected
  • When basis is stronger than normal
  • When there is ample production/stocks of grain

Producer agrees to sell a specific quantity for a certain delivery period and locks in the futures board price for delivery period. A basis will be established at a later time. There is a 5 cent charge per bushel for Hedge to Arrive contract.

• Advantages
  • Allows the producer to lock in a futures price if they feel that the board is going to trade lower
  • Producer can lock in a basis level at a later time if they feel that basis will tighten up
• Disadvantages
  • Producer gives up risk of rises in the market
  • Risk of basis widening out
• Best Time to Use a Hedge to Arrive Contract
  • When a price decline is expected
  • When you expect to obtain a better basis level at a later date

Producer makes an agreement to sell a specific amount of bushels if the cash or futures price for a specific delivery period reaches a predetermined level. Firm Offers are in place until the contract is made, or producer calls and cancels the offer.

• Advantages
  • Price targets can be reached without having to constantly monitor the market
  • Short lived rallies can be taken advantaged of
  • Offer can be canceled at any time prior to the offer being filled
  • When the market rises significantly and there is a high volume of calls being received, your contract is automatically created. It is not required that you talk to a merchandiser.
  • Firm Offers create opportunities for basis to be pushed in your favor for the firm offer to hit
• Disadvantages
  • Grain is priced at the offer – additional price potential is eliminated
• Best Time to Use a Firm Offer
  • When you feel there will be a rally in the market
  • When cash levels are at an acceptable level
  • When you feel there may be volatile markets