Managing your farm comes with many difficult and important decisions but none have a greater impact than pricing
Grain contracts are an important tool to help you manage your price risk and lock in profit. A contract is a written obligation for the buyer to accept and pay according to the terms of the contract the producer to deliver the product according to the terms of the contract. A written agreement provides clarity and avoids misunderstandings. There are several types of contracts that all have unique benefits, risks and purpose.
Snobelen Farms Ltd. makes every effort to have current and accurate market information reflected on this web page however the opinions and prices that appear on this web site are an indication only. Please contact the Origination Team for price confirmation.
Forward / Flat Price Contract
Take advantage of the opportunity to lock in a guaranteed price for your grain upon delivery. Why choose this option? You like the price or believe the price will decline before delivery.
- Eliminate downside risk
- Payment on delivery
- No storage charges
- Option of deferred payment upon your request
- Obligation to deliver grain
- You cannot participate in any price increases
Secures the “Basis” portion of your total price and gives you the opportunity to price the futures at a later point in time. Why choose this option? You believe the basis is at a good level or you think it will decrease. This should be paired with a belief that the futures will increase at a later date.
- You lock in the basis portion of your total price, allows you to still participate in future market
- No storage or stops storage charges
- You can have a 60% advance on the contract once it is delivered
- Futures can still decline
- Cannot participate in any basis appreciation
- Basis roll risk and associated costs
You sell your crop once it has been delivered to the elevator or end user. Why choose this option? You like the price and want to sell to stop storage.
- You can participate in the market after you have delivered your crop
- Payment once you sell
- Stops storage charges
- 80% of the time the best price is before delivery
- If you deliver your grain and wait to sell there will be storage charges applied
Grain Pricing Orders
Grain Pricing Order (GPO) allows you to put a target price in the market and if the value hits a contract is executed. If it does not hit in the desired time, the GPO expires and no contract is made. Why choose this option? Allows you to set price targets for your grain and allows you to focus on other priorities.
- Brings discipline to your grain marketing
- Removes emotion from marketing decisions
- Saves time and stress
- Can use with a Basis contract. Lock in the basis and set a target price for your futures
- Can have targets for new crop (crop to be harvested) or old crop in storage
- Can book multiple crop years
- Market continues to rally but you already have the fixed price
- Target price does not hit
Every Contract Includes
- Name of Buyer (Snobelen Farms) & Seller (your farm)
- Specific Quantity
- Date of Contract & Delivery period
- Specific Quality
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