Marketing Your Grain

Dec 12, 2018

Marketing Your Grain
  • Market Insights Podcast
  • 1. Grain Terms
    • Basis
      • Difference between cash price and the futures month we’re talking about
      • EXAMPLE: December futures were trading at $3.58 and cash price was $3.18 so basis is -40 or 40 under futures
      • Other basis terms:
        • 1. Nearby: futures month we’re pricing cash sales on so right now were basing CORN – DEC & BEANS – JAN
        • 2. Deferred: any month that’s not the nearby for corn it would be MARCH, MAY or JULY
    • Discount
      • Anything that is deducted from cash price of grain when you deliver it
      • Moisture discount
        • Corn will be discounted when sold to us, dried down to 15% at 4.5cents per point and 1.4% shrink
        • Storage would be at 14% at the same price, just at a lower moisture level
    • FM – foreign material
      • BCFM (broken corn)
      • #2 yellow corn is 3% or less
      • Damage corn would be allowed 5%
    • Cash Sale
      • We offer anyone to sell grain over the scale – based on live pricing
      • Will always have a posted bid, doesn’t matter if the markets are open or not
  • 2. Market Hours
    • Futures electronically between 7PM until 7:45 AM and then resumes 8:30AM – 1:15PM
  • 3. Storage
    • Open
      • You bring in grain to UFC and get warehouse receipt
      • Retain title to that grain
      • 4 cents per month
      • During harvest we do run a minimum, this years minimum was 16 cents
      • Can apply to forward contracts
    • Delayed Pricing – DP
      • 3.5 cents per month
      • You as a producer no longer retain the title
      • No warehouse receipts 
      • Can’t apply to forward contracts
  • 4. Contracts
    • Cash Sale
    • Cash Price
      • Cash sale that the producer makes for some time in the future
      • Set the basis and futures at the same time for some time in the future
    • HTA – Hedge to Arrive (Futures Fixed Contract)
      • Locking the futures in 
      • Utilize a year or two out
      • 1000-bushel increments
      • Basis is left open
      • Would have to set the basis when the grower delivers
    • Basis 
      • Set the Basis and leave the futures open
      • Can set basis for the deferred as well
    • Other – only available in 5000-bushel increments
      • Minimum Price Contract
        • Sell grain for cash value today and use a portion to buy a call option in the future months at some point
      • Premium Offer
        • Sell cash grain today and we add an amount to it for selling a call option in the future
        • If the futures market trades above the strike price, you could end up with a HTA deliverable to UFC
  • 5. Carry 
    • Difference between nearby futures contracts and the deferred month
    • Examples
  • 6. Buy it on Paper
    • One of two ways
      • Minimum price contract
      • Buy straight futures
  • 7. How can you sell grain to UFC?
    • Need an account with UFC
      • Filling out a credit app
      • Can put it under a temp account
    • Can dump grain if you don’t have an account, but to get paid you will need an account
    • Brownton has a card reader
      • Can be made in a few minutes
  • 8.Locations
    • Brownton
    • Litchfield
    • Klossner
    • Lafayette
    • Winthrop
    • Le Sueur
    • Cologne
    • Bird Island
  • 9.What grain do we take?
    • 99% is Corn and Soybean
    • Wheat in season
      • Lafayette
      • Klossner 
      • Le Sueur
      • Please Call ahead
    • Limited basis by Oats
  • 10.How to mitigate risk
    • Do as much research as they can
    • Can call and talk to anyone in

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