Grain Contracts

Contract Options

Basic Contracts

Basis contracts are contracts that allow a producer to lock in the basis and price the grain at a later date.

A producer agrees to deliver a specific quantity and quality of grain for a determined delivery period. The basis is determined by taking the difference between the local cash price for grain and the respective Chicago Board of Trade (CBOT) futures price. This spread is called the basis. This basis value becomes locked in on the contract. The final price of the contract is determined at a future date by taking the respective CBOT futures price less the locked in basis.

Minimum Price Contracts

These contracts establish a floor price for grain while offering the flexibility to participate in potential market increases.

A producer agrees to deliver a specific quantity and quality of grain for a determined delivery period. The contract sets a minimum cash price by locking in a current market price less the cost of a designated call option. Call options give the buyer the right, but not the obligation to own futures at a given strike price level. Call options gain value as the market goes higher. This allows the producer to gain value on the contract as the market works higher above the designated strike price.

Deferred Price Contracts

The DP contract is a contract where by the grain is actually sold and moved off the farm, but the price has not been determined. The title of the grain passes from the seller to the buyer, but the final price will be determined at a later date.

Assume a producer has a bin of corn on the farm that he would like to empty before beginning spring fieldwork, but the cash price is not attractive at the time. The DP contract allows the producer to move the grain, but not set the final price.

Options Trading

AGRIServices of Brunswick is licensed brokerage office under the supervision of Advance Trading, in Bloomington, Illinois. Producer accounts can be set-up for trading options on the Chicago Board of Trade.

Grain Bank

There is no charge for grain put in grain bank. Grain after the end of the month will be charged .035/bushel/month.

Grain bank corn sold to the warehouseman will be charged regular storage rates from date of delivery. Grain bank corn sold to the warehouseman will be charged regular storage rates from date of delivery.

Whole grain that is taken from grain bank in an unprocessed form and not mixed through the feed mill will be charged a .10 cent load out fee. Grind/mix/delivery charges will apply if cracked corn is taken from grain bank.