GRAIN CONTRACTS

GRAIN MARKETING CONTRACTS

Managing market risk can be daunting, whether you’re a seasoned user of marketing contracts or just beginning to use grain pricing tools. For more details, contact your local Grain Marketing Specialist.

Not sure which program would be best for you? Check out our Grain Marketing Contract Menu to see what’s available.

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NEW CROP CONTRACTING FEES

NO 2024 NEW CROP HTA FEES 

Effective March 11, 2024

Agtegra is buying corn, soybeans, and wheat for new crop 2024-2026 delivery on either HTA or priced contracts.

For those wanting to price 2025 or 2026 harvest bushels on an HTA, the following fees will apply to the futures price:

     Crop Year 2024
                Corn - FREE
                Soybeans - FREE
                Wheat - FREE

      Crop Year 2025
                Corn - $0.05/Bu
                Soybeans - $0.10/Bu
                Wheat - $0.05/Bu

      Crop Year 2026
                Corn - $0.10/Bu
                Soybeans - $0.15/Bu
                Wheat - $0.15/Bu

Please contact your nearest Agtegra location or grain marketing specialist for your grain contracting and risk management needs. 

PC

PRICED CONTRACT

A contract with a fixed (final) price for a specific delivery requirement. This contract is also referred to as a “flat price” contract.

Advantages

  • Quantity and price is fixed, with no further price risk.

  • Quality risk is passed to buyer upon delivery.

  • Money is available after contract has been completed.

Disadvantages

  • Pricing flexibility and delivery are eliminated.

  • No chance for further price increases.

    *Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers

BF

BASIS FIXED CONTRACT

The Market Base Builder contract allows a producer to price enrolled bushels equally across a predetermined pricing period. This pricing period coincides with historically good times to price new crop grain, when the market is signaling what crop it wants planted or when it experiences potential planting issues or delays.

Basis Fixed Contract (BF)

This is a formula price contract. The formula to determine price is: basis + board of trade price. At the time of contracting, the basis is established, and final price is then determined when the board price is set. Board price must be set prior to expiration date in the contract. BF contracts may be rolled forward to another board contract month, at the spread between the futures months, plus a fee for a contract change.

Advantages

  • Downside basis risk is eliminated.

  • May take advantage of future CBOT rallies.

  • May avoid a weak (harvest) basis or low flat price.

  • Can receive an advance of 75% of contract value (ex. $4.00 cash price: advance $3.00 per bu.).

  • Quality risk passes to buyer.

  • Avoids storage or price later charges.

  • No minimum bushel requirements.

Disadvantages

  • Future basis improvements cannot be realized.

  • You remain subject to the risk of changes in the CBOT futures prices.

  • Requires knowledge of local historical basis.

  • There is risk in Agtegra asking for additional equity in case cash values fall below advancement levels.

*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.
HTA

HEDGE TO ARRIVE CONTRACT

This is a formula price contract. The formula is: basis + board of trade price. At the time of contracting, the board price is established, and final price is then determined when the basis is set. The basis must be set prior to time of delivery or before the contract expiration date.

Hedge to Arrive Contract (HTA)

This is a formula price contract. The formula is: basis + board of trade price. At the time of contracting, the board price is established, and final price is then determined when the basis is set. The basis must be set prior to time of delivery or before the contract expiration date.

Advantages

  • Takes advantage of high futures levels, leaving opportunity for basis to improve.

  • Futures downside price risk is eliminated.

  • No margin calls or exchange fees.

Disadvantages

  • Open to basis-level widening.

  • Cannot take advantage of futures rallies.

  • Cannot trade in and out of HTA contracts as with futures contracts.

  • The delivery of the contract is mandatory.

  • Payment is not received until basis is set and the grain is delivered.

*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.
BC & BP

MINIMUM PRICE CONTRACT

This contract establishes a guaranteed base price protecting you against lower prices, but permits participation if the market rallies. The final price will be the minimum price plus any value the option provides if the market rallies prior to the expiration of the option.

Minimum Price Contract
(BC & BP)

This contract establishes a guaranteed base price protecting you against lower prices, but permits participation if the market rallies. The final price will be the minimum price plus any value the option provides if the market rallies prior to the expiration of the option.

Two Contract Alternatives:

1.  Minimum Price using a put option (BP):

  • Lower price floor than using a call option

  • Buy a put option that is at or out-of-the-money

  • Minimum Price is the strike price of the option minus the premium paid and basis

2.  Minimum Price using a call option (BC):

  • Higher price floor than using a put option

  • Set futures by entering into an HTA or Priced Contract

  • Buy a call option at or out-of-the-money

  • Minimum Price is the futures price minus the premium paid and basis

Advantages

 

  • Risk of CBOT futures price decline is eliminated, yet allows the opportunity to participate in higher futures prices if the market moves higher prior to the contract’s expiration date

  • The minimum price is guaranteed and paid in full upon completion of delivery.

  • No upfront premium - Agtegra covers the premium and deducts it from the final price

  • Premiums are based on CBOT traded options

  • Ability to roll up to higher strike prices if the market rallies to increase the Minimum Price floor and still participate in further market appreciation

  • Very safe and costs are easily identified

Disadvantages

 

  • Does not permit trading in and out of markets as delivery is required

  • Depending on option prices and volatility, it may cost more than storage rates

  • At the time of contracting, the Minimum Price level may be less than forward contracting

  • Requires selling in 5,000 bushel increments

What are the costs associated?
  • To initiate a Minimum Price Contract it costs $0.02/bu for corn and $0.04/bu for soybeans.
  • The new rolling feature that allows you to improve your minimum price if the market rallies costs $0.01/bu for each roll. The amount of times you can roll your strike price is not limited.
  • If the option is in-the-money and you elect to exercise the option to improve your final price $0.02/bu will be deducted from the option value.
​*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.
MM

MIN-MAX CONTRACT

A Min-Max contract establishes a minimum price protecting you against lower prices, but permitting participation if the market rallies up to a predetermined maximum price using exchange traded options. The final price of the Min-Max contract will be the minimum price plus any value the option positions provide if the market is above the minimum prior to the expiration of the option.

Min-Max Contract (MM)

A Min-Max contract establishes a minimum price protecting you against lower prices, but permitting participation if the market rallies up to a predetermined maximum price using exchange traded options. The final price of the Min-Max contract will be the minimum price plus any value the option positions provide if the market is above the minimum prior to the expiration of the option.

Advantages

  • Provides a price floor

  • Has a reduced cost when compared to a Minimum Price contract as it offsets high-option premiums in exchange for a ceiling above the market

  • You can set the final cash price at any time during CBOT market trading hours

  • No upfront premium - Agtegra covers the premium and deducts it from the final price

  • Ability to roll up to higher strike prices if the market rallies to increase the minimum price level and still participate in further market appreciation

  • Risk Parameters are known and costs are easily identified

    Contact your Grain Marketing Specialist today for more information

     *Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.
     

Key Issues and Risks

  • Does not permit trading in and out of markets as delivery is expected

  • The upside potential price of this contract is limited to the maximum price

  • Depending on option strike prices and volatility, it may cost more than storage rates

  • Requires selling in 5,000 bushel increments

    What are the costs associated?

  • To initiate a Min-Max contract it costs $0.03/bu
  • The new rolling feature that allows you to improve your minimum price if the market rallies costs $0.01/bu for each roll. The amount of times you can roll your strike price is not limited.
  • Producer has the option to place orders to lift off the ceiling (Max) if prices drop to levels that make economic sense. For example: If the producer sold a call option for $0.10 and is able to buy it back at $0.01 we could place an order to remove the maximum price in the event the market would rally prior to option expiration.
OTC

OVER-THE-COUNTER

  • Premium Contract
  • Agtegra’s over-the-counter structured products can be utilized to enhance your market position, allowing you to sell at a premium to the current market. The primary goal of these products should be to effectively manage your risk with the help of your local Grain Marketing Specialist.

Over-The-Counter (OTC)

  • Premium Contract

  • Agtegra’s over-the-counter structured products can be utilized to enhance your market position, allowing you to sell at a premium to the current market. The primary goal of these products should be to effectively manage your risk with the help of your local Grain Marketing Specialist.

OP, OB, OH

TARGET PRICE AGREEMENT

Producers may enter into an agreement, whereby they make firm “offers” to enter into a cash grain contract with Agtegra. We will then “accept” that offer if market conditions allow.

Target Price Agreement
(OP, OB, OH)

Producers may enter into an agreement, whereby they make firm “offers” to enter into a cash grain contract with Agtegra. We will then “accept” that offer if market conditions allow.

Advantages

  • Price targets can be reached if you are not able to monitor the markets minute by minute.

  • Takes advantage of short-lived day rallies, if your offer is working in the Agtegra Target system.

  • If you have a price goal in mind, it puts it in writing and gives you something to watch and monitor.

  • Any price amount and bushel quantity can be offered.

  • Offers can be used to price cash, storage or new-crop delivery grain.

  • Offer to sell may be cancelled by seller anytime, providing notice has been received by buyer prior to offer being filled.

Disadvantages

  • The grain will be priced at an offer, and if the market rallies past the set offer, additional gains will not be realized.

  • Putting offers to sell at even dollar amounts can sometimes be costly. An example is an offer to sell $4.00 corn, and the price tops at $3.99; then the market falls to $3.50. Fails to “pull the trigger.”

*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.

MBB

MARKET BASE BUILDER PROGRAM

The Market Base Builder contract allows a producer to price enrolled bushels equally across a predetermined pricing period. This pricing period coincides with historically good times to price new crop grain, when the market is signaling what crop it wants planted or when it experiences potential planting issues or delays.

Market Base Builder Program

The Market Base Builder contract allows a producer to price enrolled bushels equally across a predetermined pricing period.  This pricing period coincides with historically good times to price new crop grain, when the market is signaling what crop it wants planted or when it experiences potential planting issues or delays.

The program is priced April – June on corn and May – July on beans. Deadline to enroll is the day before program start. Please contact your location for more information.

At the end of the pricing period, the futures price on the contract will be the average of the closing futures prices across the duration of the pricing period, minus a $0.03/bu administration fee.

Advantages

  • Takes the emotion out of having to make the decision to market bushels.

  • Guaranteed to not sell on the low during the pricing period.

  • Provides a benchmark for comparing additional grain sales against.

Disadvantages

  • The average futures price will not be at the high during the pricing period.

*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.

DP

DELAYED PRICING

It is important to note that, unlike storage, title to the grain passes to the buyer upon delivery. Producers will not be able to use price later grain as collateral for government loans or Loan Deficiency Payments (LDP). Service charges are based on market differentials (carries/inverses) and may or may not be less than storage charges.

Delayed Pricing (DP)

This contract allows a producer to move grain to an Agtegra location without establishing any price. Charges vary with market conditions.

It is important to note that, unlike storage, title to the grain passes to the buyer upon delivery. Producers will not be able to use price later grain as collateral for government loans or Loan Deficiency Payments (LDP). Service charges are based on market differentials (carries/inverses) and may or may not be less than storage charges.

Advantages

  • Can make delivery while avoiding historically low (harvest) prices.

  • The emotionalism of pricing is separated from the physical handling of the grain.

  • Do not need on-farm storage, and delayed pricing may be cheaper than commercial storage.

  • Quality risk passes to buyer upon delivery.

Disadvantages

  • Subject to basis and CBOT price risk.

  • No payment until contract is priced.

  • This is not STORAGE! Title passes to buyer and you are unable to get a CCC loan or LDP once put into price later.

*Offerings subject to change without notice. The above contracting tools involve market risks and may not be appropriate for all producers.
PLEASE NOTE: There is an inherent risk in grain marketing. Grain marketing decisions are the decision of individual producers. Agtegra assumes no responsibility for grain marketing decisions made by individual producers.