Also known as priced, or flat price contracts; a cash contract is the most common and straightforward grain contract. A fixed price is set for product delivery at an agreed-upon time; this can be immediate (spot) or at a deferred (forward) date. Futures and basis are set simultaneously, and the price of the contract will not change over time. Producers can also elect to submit a cash offer for a specific quantity, delivery period, and price. If the market reaches the specified price for the associated delivery period during trading hours a contract will be automatically generated for their account.

Extended Price Contract

An Extended Price contract allows you to price grain that has already been delivered or will be delivered in a future month. When you set your price, you’ll receive 70% of the cash value, either at the time of sale or upon delivery to FCS. The remaining 30% is held back in lieu of purchasing a futures contract in a later month on the Board of Trade.

This contract gives you the opportunity to benefit if the futures market moves higher after you’ve priced your grain. Your final price will be determined when you exit the futures position. While there is a risk of loss if futures decline, you can participate fully (100%) in any futures market gain, unlike a minimum price contract.

Example:

• You price cash corn for December delivery at $3.84/bu and receive 70% upfront ($2.69/bu).
• You purchase a May corn futures contract at $4.50.
  • If May futures rise to $5.00, you gain $0.50, making your final cash price $4.34/bu ($3.84 + $0.50).
  • If May futures fall to $4.00, you lose $0.50, making your final cash price $3.34/bu ($3.84 - $0.50).
• In either case, FCS issues a final payment for the remaining 30% balance while accounting for any futures gain or loss.
• A $0.03/bu service fee applies to Extended Price contracts.

No Basis Established (NBE, HTA, Futures Fixed)

A NBE contract offers sellers the ability to lock in just the futures portion of a cash grain contract for a quantity to be delivered in the future. An HTA is typically employed when sellers think that the price of futures are high but believe basis will improve or they wish to remain flexible on when they deliver against the cash grain sale. The basis portion of the contract must be set before the grain is delivered.

• Eliminates downside futures risk on those bushels marketed.
• Allows for basis appreciation before delivery.
• Seller has the option of rolling the contract to a new futures month and delivery period.
• If the seller elects to roll, they will gain the spread (in the case of a carry market) or lose the spread (in the event of an inverse market) at the time they roll. There is a fee associated with rolling to a new month.
• Final pricing must occur within the same crop year (Oct – Sep).
• There is a fee commensurate to the amount of time the buyer will hold the HTA prior to delivery.

• Contract tools used to accumulate a futures position throughout regular intervals throughout different time periods.
• Growers can customize accumulators to meet their specific risk profiles.
• Accumulation level is generally advantageous to current market conditions at initiation.
• Many different possibilities for structure type and timeframe to meet your specific needs.

A Delayed Price contract allows a seller to deliver grain without establishing either futures or basis price. A delayed price contract is similar in many respects to storage, but the seller has relinquished title to the grain.

• Delayed Price must be sold at the current nearby bid when you as the producer decide to sell.
• Allows the seller to deliver grain immediately and wait for more favorable futures or basis market conditions.
• Eliminates the risk of quality deterioration that is inherent with storing grain.
• Allows the seller to price grain after delivery and potentially benefit if the market rallies.
• Does not provide payment until the contract is priced.
• Provides no protection to the seller of grain in the event the market declines prior to pricing.
• Services charges may apply depending on market conditions.

Service charges and quality terms are usually more favorable than open storage.

A seller makes a cash grain sale in conjunction with a firm, irrevocable offer to sell an additional quantity at a defined futures price should the market reach that level later. The seller receives a premium on the nearer cash sale that corresponds to the call option premium.

• The future offer does not expire until options expiration of the associated futures contract and the seller will not know if they have an additional bushel commitment until that date.
• Downside price risk is eliminated on the nearer cash sale on which a premium was paid, but downside risk remains on the latter bushels offered.
• High volatility corresponds to higher premiums.
• Fee applies relative to premium received.
• Can not manage downside price risk or additional offered bushels.

FCS offers a wide range of minimum price contracts using options to limit your market risk, allowing you the ability to lock in a price floor while leaving upside participation intact, with the ability to participate in both pre- or post-harvest delivery. Using Options can be complex, but we can help explain them simply so you can leverage these powerful tools for your operation:

• Minimum Price contract before the cash sale 
  • This uses a Put Option that benefits you if prices decline while leaving the top open for a later cash sale. It allows you to know the absolute “floor price” or minimum price you would have on those bushels.
• Minimum Price contract after the cash sale
  • This uses a Call Option that benefits you if prices increase after you already priced your grain. The cash price minus the price of the Call Option is your minimum price. But if prices continue to rise in the months after the cash sale, you can still benefit from that price increase.
• Option Combos or Window Trade 
  • For the more experienced grower with Options, we can tailor Option Strategies Like a Put/Call Collar or Window that involves buying one option and selling another option either in the same month or future months. Use of these strategies can help lower the initial cost to the grower but do involve some risk that we can explain in more depth should you see these strategies as a fit for your operation.

A basis contract locks in a basis price relative to a given futures month and delivery period. Pricing of the associated futures can be done before or after delivery.

• Allows the seller to make physical delivery of grain at an agreed-upon time and to benefit from a futures market rally before the final pricing date on the contract.
• Allows the seller of grain the ability to lock in favorable basis levels if the seller feels the basis market will decline before pricing the futures portion of the contract.
• Eliminates storage expenses and quality risk while waiting for higher prices.
• Provides no protection to the seller of grain in the event the futures market declines prior to pricing.
• Must be priced or rolled to a subsequent futures month by the options expiration date of the associated futures contract.
• If the seller elects to roll, they will either gain the spread (in the case of an inverse market) or lose the spread (in the case of a carry market) at the time they roll. There is a fee associated with rolling to a new month.

Allows the FCS to store your grain today and the ability to price at a later date.

The FCS On Farm Pick-Up program allows a seller to use FCS’s transportation to ship corn or soybeans from the seller’s farm tom an FCS or Direct Ship location.

• Your FCS Grain Marketing Specialist will quote you a picked-up price based upon the cash price less transportation costs based on miles away from destination of sale.
• Allows the seller to utilize FCS trucks instead of their own trucks or wagons
• Eliminates seller transportation and shipment delay risks
• Gives seller access to markets that are further away from their farm than they would typically ship to if prices can justify a farther move.
• Seller will pay for transportation costs via a deduction from their grain settlement.

The FCS Direct Ship program allows a seller to sell to a non-FCS processor of corn or soybeans at the processors posted price, and sold through FCS.

• Your FCS Grain Marketing Specialist will find the latest posted price delivered into your desired processing facility that you can then book through FCS.
• Sellers contract is written with FCS, and you will be paid by FCS.
• Allows the seller access to sell at processor bids when they may be more advantageous than selling directly into a FCS location.
• Discount schedules of the processor being delivered to will apply for all settlement procedures.