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