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Premium Contracts

The Wheat Growers grain team works hard to bring you a variety of contracting options. However, the contracting tools may not be appropriate for all producers. For more details please contact your Grain Originator.

Floored Average

This marketing agreement allows you to establish a minimum futures floor price, but also allows you to participate in the upside. The Floored Average contract pays you the average futures price over a set period of time. However, you are guaranteed no worse than a pre-defined floor price.

Advantages:

  • The producer is guaranteed the higher of the average futures level or the floor price.
  • The average price is specified.
  • Flexibility to establish basis anytime prior to delivery.
  • Removes the stress, frustration and risk of decision making with marketing.

Disadvantages:

  • The contract is sensitive to the timing.
  • Does not capture all the gains during a volatile market.

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

Cash Plus

This contract works when a producer sells old-crop bushels on a spot sale or on a forward priced contract. In addition, the producer makes a firm offer and receives a premium on the old-crop contract for an equal amount of grain of the old-crop contract, at a specific strike price.

Advantages:

  • Quantity and price is fixed on old-crop with no further price risk.
  • Quality risk is passed to buyer on the old-crop.
  • Money is immediately available on the old-crop.
  • Premium is paid on old-crop bushels and is tied to a firm offer of an equal amount of grain at a specific strike price, for a future delivery period.

Disadvantages:

  • Pricing flexibility and delivery are eliminated.
  • No chance for further price increases on old-crop.
  • Firm offer becomes a future fixed contract, only if the futures trade above the strike price at the close of the trade on the contract expiration date.

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

Price Builder

This contract prices equal numbers of futures at the floor price each trading day the market trades above the knockout price, up to the target price at the close of the day. The floor price is offered at a premium to the futures price at the time of the contract creation. This contract will price until the contract expiration date or the knockout price is reached and the contract ends.

Advantages:

  • Can participate in market upside up to the target price.
  • Accumulates priced bushels daily at minimal costs.
  • The futures floor price is established above futures price at contract initiation.
  • Flexibility to establish the basis anytime prior to delivery.
  • Reduces stress, frustration and risk in making daily marketing decisions.

Disadvantages:

  • Remains subject to the basis level fluctuations until the basis is established.
  • Uncertain of the amount of basis to set.
  • May not price all bushels on the initial contracted bushels.
  • The daily futures settlement price may not exceed the target price.
  • The pricing opportunity is range bound.

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

Price Builder Bonus Contract

This contract prices equal numbers of futures at the floor price each trading day the market trades above the knockout price up to the target price at the close of the day. If the futures price closes above the target offer price at expiration and the contract has not been knocked-out, additional bushels equal to the initial number of bushels offered in the contract are priced. The floor price is offered at a premium to the futures price at the time of the contract creation. This contract will price until the contract expiration date or the knockout price is reached and the contract ends.

Advantages:

  • Can participate in market upside up to the target price.
  • Can participate in a market upside up to the target/offer price, if a contract with a target/offer price above the floor has been chosen.
  • Accumulates priced bushels daily at minimal costs.
  • The futures floor price is established above futures price at contract initiation.
  • Flexibility to establish the basis anytime prior to delivery.
  • Reduces stress, frustration and risk in making daily marketing decisions.

Disadvantages:

  • Remains subject to the basis level fluctuations until the basis is established.
  • Uncertain of the amount of basis to set.
  • May not price all bushels on the initial contracted bushels.
  • The daily futures settlement price may not exceed the target price.
  • The pricing opportunity is range bound.
  • Has the obligation to deliver additional bushels if the futures price exceeds the target/offer price at expiration.

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