Contracting Options 12/05/22 2:16:01 PM|
Flat Price Contracts
Set the futures, basis, and delivery period on a certain amount of bushels.
Ex. fall delivery
Dec corn for fall delivery is trading @ $5.80 and the basis is -.10. You will receive a check for $5.70 per bushel, less applicable discounts.
Determine a time in which you want to deliver corn and set the basis level for that time but, leave the futures unset.
Ex. March delivery
There is a bumper crop and most places are getting full, which tells you that basis levels will likely become negative (or the demand from buyers will be low.) However you feel as though there is still upside in the futures market. You know you need to move corn in March, so you sell the basis today and wait for the market to get higher.
Sell March basis (and set March delivery) today at +.30 and sell futures later @ 5.95. You will receive 6.25 cash, less applicable discounts.
Futures Contract or HTA
Sell the current futures price on a specific month but you leave the basis and delivery to be determined. There is a fee schedule with this option depending on how far into the future you sell the bushels.
EX. Fall 2023
You see that December 2023 futures are trading @ 6.00 for next year, but are unsure of what the basis will be since the crop has yet to be planted. You decide to sell the futures price but you wait to sell the basis until you get a better handle on what the local supply will be.
Upon delivery, you would be paid on 6.00 plus or minus then current basis, less contract fees and applicable discounts.
Add a 10-20 cent premium to any posted cash price for any delivery period. Make a flat contract and give us a firm offer to sell an equal amount of bushels at some higher price in the future. The more aggressive the next sale, the higher the premium.
Minimum Price (only available to the farmer)
Allows you lock in a set price on a specific time period and gives you unlimited potnetial penny for penny market gains over your "strike price"
Ex Minimum price contract for May delivery
Sell your corn @ 6.20 cash for May delivery. For a fee, you can participate in a July futures rally. Lets say we lock in a 6.00 July strike price. Anytime between now and July option expiration, you have unlimited market gain potential if July futures trade higher than 6.00. These contracts must be written in 5000 Bu increments.
Allows you to price bushels above the market price but will double the amount of bushels sold if the final futures price excedes the selling price. There is a specific time period for contract pricing and 2 target prices - the selling price and the knock out price. You sell bushels daily in small amounts duringa specified time, in which, one of three things can happen:
1. If the futures price is above the knock out price but below the selling price the specified bushels are sold at the selling price
2. If the futures price is below the knock out price then the contract is terminated with any remaining bushels left unsold
3. If the final futures price is above the selling price then the amount of specified bushels stated on the contract double at the price stated on the contract.
Please call Aaron or Brandon or Jeremy with any questions regarding these contracts or other options. 888-878-2676.