LFC Marketing Tools 06/11/15 4:15:22 PM
Printer Friendly Version|
LFC Marketing Tools
Leland Farmers’ Company can provide several tools to market your grain. We are your “Grain Specialist!” Your Leland Farmers’ Team will help you to seek out the best markets. We have access to multiple locations and delivery points to market your grain. We have several tools available to help you manage risk for your operation. We have some of the best talent in the industry dedicated to you! Please contact us to see how we can help you! Below are a few of the many tools at your disposal through Leland Farmers’ Company.
Cash/Spot: Probably the most common. You receive the spot price at the time of delivery. No arrangements need to be made prior to delivery. You can choose to receive payment for your grain immediately or you may defer the payment until a later date.
Cash Forward Contract: It is just that. You pick a delivery period and location and we write a cash contract for any bushel amount for the price for that period. You deliver during the delivery window and we apply your bushels to your contract. This contract locks in both the futures and basis.
Hedge-to-Arrive/HTA/Futures Only: The “Futures Only” contract kind of explains itself. You lock in the futures price for any CBOT contract month for any amount of grain. You will then have to lock in the basis for your contract at a later date. The key benefits for using a HTA contract would be to lock in your futures when basis is weak and hope for better. This is one of the most flexible contracts to use. If you are happy with the price on the Board of Trade, but aren’t sure where or when you want to deliver, you can use a HTA contract to do so. Basis must be set prior to delivering on a Futures Only contract.
Basis Contract: There are two parts to a cash contract. One is the Futures Price and the other is the Basis. This contract locks in only the basis portion of your price. When you write a Basis Contract, you lock in your basis, delivery location, and delivery period. Delivery of grain can be made without pricing the CBOT futures price. After delivery, you can elect to receive up to an 80% cash advance against contract until it is priced. This contract is beneficial when you need or want to move grain, but want to give the futures time to rally.
Minimum Price Contract: The Minimum Price Contract puts a floor price on your grain and lets you participate in upward movement in the market. This is done by buying a Call Option and subtracting the premium of the Option from the price of your contract. These contracts can be done in combination with Spot, Forward, and Futures Only Contracts.
Accumulator Contract: The Accumulator Contract allows you to have bushels priced weekly above the current market, if certain conditions are met. Contents of the contract include an accumulator futures sale price, a knock out barrier, and a specific pricing period. The accumulator futures sale price will be above the current market, the knock out barrier will be below the current market, and the pricing period will be a specific amount of weeks. Pricing will occur in equal amounts once a week at the accumulator futures sale price unless the knock out barrier is hit. There are several variations of this contract available for differing market conditions. Please ask if you have interest in this type of contract and we can go into further detail.