Grain Marketing Options

Success Starts with Risk Management

Why Have a Risk Management / Marketing Plan?

  • A plan that’s mapped out ahead of time can allow you to confidently execute decisions when the market allows. 
  • Expenses, break-even, profit expectations, and other components that may affect your operation are already broken out. 
  • Have a set dollar figure for expected/projected profit, not just as much as possible. 
  • Provide clarity and eliminate the noise when marketing grain.

Understanding Basic Cash Grain Contract Alternatives

The following information is provided by Key Cooperative to assist grain producers in better understanding, selecting and utilizing the various cash grain contracts and credit sale contracts that Key Cooperative offers. Key Cooperative is committed to helping our producer-owners capture increased value when marketing grain and managing price risk at acceptable levels to their individual business needs.

 

THE CASH GRAIN FORMULA:

FUTURES +/- BASIS = CASH PRICE


It’s important to know this basic formula to be able to understand and utilize the various cash grain contracts that Key offers.


The futures price comes from the CME (Chicago Mercantile Exchange) which was previously known as the CBOT (Chicago Board of Trade). The CME is a commodity futures exchange which was established in 1848. The basis is the difference between the futures price and your final cash price. The basis consists of transportation costs, handling and storage costs, interest costs, supply and demand fundamentals, local conditions and other relevant factors.

Contract Options Available at Key:

FORWARD PRICE CONTRACT
NO BASIS ESTABLISHED
BASIS ONLY CONTRACT
MINIMUM PRICE CONTRACT
AVERAGE PRICE CONTRACT
PRODUCER ACCUMULATOR
EXTENDED PRICE CONTRACT
PREMIUM OFFER CONTRACT
MERCHANTS PLUS CONTRACT

Advantages of Marketing Grain through Key

Key’s FOB and Direct Ship programs provide access to all markets.

  • Key Cooperative offers a Free-On-Board (FOB) Program. This grain marketing option is designed to help you increase your truck power and capture markets you previously may not have had access to. The Key Cooperative FOB Program quotes you a competitive custom bid for picking up grain at your farm. The bid will reflect the best value based on the relevant end-users within your trade area. Your quoted net price has a deliver charge figured in.

  • Key has a fleet of company trucks in addition to independent haulers that can increase a producer’s truck power and insure grain is picked up and delivered on time.

  • Key may pass through a DPAD tax deduction, domestic production activities deduction, (Section 199) on all corn and soybeans sold through Key Cooperative. Amount will vary year to year. This is a deduction that only cooperatives can pass on to their customers.

  • Grain payment may be deferred to the next tax year through Key.

  • Producer is guaranteed to get paid regardless of the End-Users financials when grain is sold through Key Cooperative.

  • Free access to field marketing specialists that can assist producers in managing their offers and overall grain portfolio with the flexibility of using a combination of Key’s various cash grain contract and credit sale contract offerings

  • If grain contracted through Key Cooperative for direct ship or farm pick up to an end-user is too wet, Key will give the producer the flexibility to deliver to a Key Cooperative location. We simply adjust for the difference in basis on the day it was contracted.

Risk Management Team