A standardized contract that allows the producer to lock in the flat price of grain for a future delivery period.

• The goal of this contract is to lock in a futures price, basis and delivery period.
• Producer loses the opportunity to enhance price if the market trades higher.
• The farmer has basis and futures risk if the bushels that were sold are not produced and prices are trading above the sales point.
• The contract price is the cash sales price.

No preparations need to be made prior to delivery. A producer receives current spot price at delivery time. Title passes to buyer at time of sale. The producer can choose to receive payment for their grain immediately or they may defer the payment until a later date.

• The cash spot sale locks in a futures price and the basis at time of delivery.
• Producer loses the opportunity to enhance price if the market trades higher.
• The contract price is the cash sales price.

A basis contract allows the seller to partially lock in a future delivery price. The initial contract specifies the bushel amount, delivery period and the basis relative to a particular futures option month. The part of the price that is fixed is the basis. The basis is the difference between the cash price and the underlying futures. The futures price is to be set at a future date, but must be priced before the relative futures contract expiration.

• Depending on the market conditions the seller may have opportunity to change (roll forward) the referenced futures contract month, resulting in a new basis, but not from one crop year to another.
• Should be used when customer believes that the current basis is satisfactory or may widen, and that the futures market has the potential to go higher.

A un-priced contract that allows the customer to deliver his grain now and maintain the right to establish the flat price at a later date.

• The goal of the DP Contract is to allow price flexibility for an extended period of time.
• The customer believes that the flat price of the grain will improve later, but needs to move physical grain now.
• The title of the grain passes upon delivery to the elevator and a service charge may apply.

Contract to sell physical grain and buy a call option. The Minimum Price is established at the time of contract writing and is the result of the sales price less the cost of the call option premium and service charge. Title passes to buyer upon delivery. Delivery period and destination shall remain fixed. If at the time of the call option expiration the call option has value, the minimum price will be increased by the value of the call option.

• The goal of the minimum price contract is to lock in a cash floor price and the basis while allowing for flexibility to the upside.
• The producer should use this contract when he/she anticipates that the futures price may have a chance of rising, but still wants to protect a minimum price should that move not materialize.

Contract to sell physical grain while buying a put option and simultaneously selling a call option to create a range of potential prices and reduce the out of pocket cost.

• The goal of the min/max contract is to lock in a futures floor price while providing upside market potential with known limit. Producer has the option to lock in basis at time of contract or later. Basis must be established at or before delivery.
• This contract should be used when you think the prices are expected to be in a narrow range, yet trend higher over a period of time before the final pricing deadline. Should the price be lower than the minimum, then the producer receives that price less the net options premium, fees and basis.

A cash contract that uses put options to lock in a minimum price.

• The goal of this contract is to lock in a futures floor price while providing for upside market price potential. The producer has the option to lock in the basis at time of contract or later. Basis must be established at or before delivery.
• The risk to the farmer is identified at the time the contract is made and is limited to the put premium plus service charges.
• If the market rises above the strike price, a higher price may be possible.
• The contract price is the strike price less the cost of the put, service charge and basis.