Success Starts with Smart Risk Management

Both the futures and basis portions of the formula are determined in a single decision, simultaneously. This contract allows the producer to capture and lock in the elevator’s or end-user’s price for a specific delivery time frame. When used prior to harvest, the contract is typically created when the producer is satisfied with the price, wants to assure cash flow, or wants to save on storage and shrink costs. Post-harvest purchase contracts are usually used when the price in the future has appreciated enough over the current cash price to cover storage and interests costs. Fees: There is no fee to write this contract.

Also known as an “HTA or Futures Only Contract” locks in only the futures price portion of the cash price. Once the basis is set, both parts are fixed and a purchase contract is created. A No Basis Established Contract should only be used when the producer is fully satisfied with the futures price level, but is not ready to finalize the basis which sets the delivery time frame and delivery location. Fees: $.03 for old crop corn and $.05 for old crop beans – Rolls are an additional $.02. Fees for 12+ months out: $.05 on corn and $.07 on beans – Rolls are an additional $.02. Fees for 24+ months out: $.07 on corn and $.09 on beans - Rolls are an additional $.02.

This contract establishes or fixes only the basis portion of the cash price but leaves the futures price decision open. Once the futures are established, both parts are locked in and a Purchase Contract is created. A Basis Only Contract should only be used when the producer is fully satisfied with the basis but is not ready to finalize the futures. Fees: No charge if the basis contract is priced before delivery. There will be a $.03 per bushel service fee if the contract hasn't been priced by the day of delivery. Rolls are an additional $.02.

This contract is executed by initializing a Purchase Contract and, at the same time, purchasing a call option which acts like price insurance. The minimum price is established by subtracting the call option premium cost from the purchase contract price. This contract locks in a cash price floor while maintaining an opportunity to improve your net price. Additional income may be captured if the Chicago futures contract linked to the call option increases in value before the call option expires. Fees: There is a $.03 per bushel, one-time fee to write this contract.

The producer defines a set amount of grain to be sold at a specific desired price. The bushels will be evenly divided and sold at a predetermined price level or better on every Wednesday over a set number of weeks. If the price on Wednesday of any given week is not at the desired price level set by the producer, no grain will be sold. However, the no sale weeks will be kept track of and unsold bushels will be sold if and when the cash price rises to or above that level on a following week. If the trigger level is set above the current cash market, there is no guarantee that any bushels will be sold over the life of the contract. The producer does have the option to sell a set amount of bushels on the same day every week over a set number of weeks with no minimum price established, therefore guaranteeing a sale weekly. Fees: There is no fee to write this contract.

This contract allows you to sell grain above the current futures level with some stipulations.
• Each week the referenced futures contract settles at or below the accumulation level, 100% of the weekly quantity is priced at the accumulation level.
• Each week that the referenced futures contract settles above the accumulation level, 200% of the weekly quantity is priced at the accumulation level.
• If on any date between trade date and end date, during the electronic or non-electronic regular exchange daily session, the referenced futures contract trades or settles at or below the knock-out level, accumulation ceases. Any bushels already accumulated will continue to exist at the accumulation level.
Fees: There is a $.04 per bushel, one-time fee to write this contract.

This contract is executed by initializing a Cash Price Contract and at the same time going long a Chicago futures contract. Similar to the Minimum Price Contract, the Extended Price Contract provides you additional time to capture upside futures potential. Unlike the Minimum Price Contract, you don’t incur the cost of the call option purchase. The risk/reward here is that without incurring the call option premium cost, you don’t set yourself a price floor, and thus are open to futures downside risk as well. Fees: There is a $.03 per bushel one-time fee to write this contract.

This contract is initiated with a Cash Sale Contract and then tied to a call option sale. The premium received from the call option sale is then added to the Cash Sale Contract. The offer portion of this contract is tied to the strike price of the call option sold. If, on the last day of trading for that options futures month, the current price is at or above the call option strike price, you then need to deliver a second equal portion of bushels at that strike price (+/- the basis). If, on the last day of trading for that options futures month, the current price is below the call option strike price, then no further delivery obligations are necessary. Regardless of whether you end up delivering a second portion of bushels or not, you retain the premium from your call option sale. Fees: There is a $.02 per bushel fee to write this contract and an additional $.02 per bushel fee if your strike price offer is triggered.