Crop Marketing

Farm operations are unique and require customized marketing plans:

  • Differing production yields
  • Multiple crops & rotations needs
  • Storage Capacity
  • Cost inputs & Crop Insurance
null

PRODUCTION RISK

Ways to Mitigate
  • Insurance
  • Irrigation
  • Practices enhancing productivity

null

MARKETING RISK

Ways to Mitigate
  • Can be reduced periodically through booking of crops (managed)
  • A plan is essential to success
  • Strategies can assist in optimizing price and farm revenue

How we get there

Financial planning & analysis custom to your farm
Market analysis mapped to your farm
Market strategies & crop booking unique to your farm
  • Cost/benefit analysis
  • Breakeven analysis
  • Quantify target prices
  • Dedicated personal contact
  • Market price reports
  • Basis
  • Stress testing, what-if matrix, & risk analysis
  • Crop booking report & monitoring

Case Study

We’ve recorded the cash sales vs local bids for our farmers and identified a trend – continually beating out local bids with our cash sales.

**Disclaimer: The above represents actual PRICED cash sales vs the local posted bids from Central South Dakota between October 2018 and January 2019. Trucking costs may vary for longer distance runs.

Forward Sales / Cash Contracting / OTC Contracts

Cash contracts are legal contracts between producers and end buyers like elevators, typically in the form of contracts like HTAs (hedge to arrive), accumulators, price floors, and simple forward sales. These contracts are utilized as price / risk management tool in addition to or in place of traditional futures accounts and insurance products, allowing complex option based strategies and hedge methods without the need for funding a futures account and posting margin.

Benefits:

  • Forward Price Grain:

Producers are able to forward price grain by locking in price and/or basis, purchasing average pricing contracts, and more all ahead of time.

  • No margin required:

The elevator is responsible for establishing the futures positions and putting up the margin.

Risks:

  • Transaction costs:

are typically higher on these contracts than a typical brokerage trade due to the higher cost of capital to the elevator for providing the margin financing.

  • Counter party risk:

If the elevator goes bust the contract is at risk – call our team to review additional options

All payments to the farmer come from the elevator – liquidity risk between time of delivery and payment is the risk.

Crop Pricing Flowchart

Farming soltions options2_

Examples of types of Forward Sales/Cash Contracts

 

  • Hedge to Arrive (HTA) – Set futures price with physical or virtual elevator
  • Basis Contracting – Set delivery location and basis
  • Fixed Price Contract – Set futures price and set basis

Examples of OTC Contacts

 

Lookalike options and futures – customers have the full flexibility of traditional futures and options transactions.

Structured products- More commonly referred to as Accumulators, these products allow a customer to accumulate forward purchases or sales above or below the current market tied to agreed upon restrictions.  There are many different types of accumulators including those that allow for price protection and others that will double up purchases or sales. 

Some examples include:

  • Double up
  • Range
  • Fence
  • Weekly double up

Ready to Get Started. Call Now! (855) 726-0060

logo0