Premium Discounts & Contracts

Grain Marketing Contracts

Listed below are the different types of contracts currently offered by CHS Northland Grain. Please explore the various contract options we offer. Please note that the contracting tools listed below involve market risks and may not be appropriate for all producers.

Priced Contract (Flat Price Contract)

This is a contract with a final price for a specific delivery requirement.

Advantages:

  • Quantity and price is fixed, with no further price risk.
  • Money is immediately available upon delivery of grain.

Disadvantages:

  • Pricing flexibility and delivery are eliminated.
  • No chance for further price increases.
  • The delivery of the contract is mandatory.

Basis Fixed Contract

This is a formula price contract. The formula to determine cash price is: basis + futures price. At the time of contracting, the basis is established, and final price is then determined when the futures price is set. Futures price must be set prior to expiration date in the contract, which is generally at or around the 20th of the month prior to the futures date.

Advantages:

  • Downside basis risk is eliminated.
  • May take advantage of grain future rallies.
  • May avoid a weak (harvest) basis or low flat price.
  • Can receive an advance of 70% of contract value (ex. $2.00 cash price: advance $1.60 per bu.).
  • Avoids storage or price later charges.

Disadvantages:

  • Future basis improvements cannot be forecasted or determined.
  • You remain subject to the risk of changes in the grain futures prices.
  • Requires knowledge of local historical basis.
  • There is risk in basis fixed contract asking for additional equity in case cash values fall below advancement levels.
  • The delivery of the contract is mandatory.

Hedge To Arrive Contract (HTA)

This is a formula price contract. The formula is: basis + futures price. At the time of contracting, the futures price is established, and final price is then determined when the basis is set. The basis must be set prior to time of delivery and prior to the contract expiration date, which is generally at or around the 20th of the month prior to the futures date.

Advantages:

  • Takes advantage of high futures levels, leaving opportunity for basis to improve.
  • Futures downside price risk is eliminated.
  • No margin calls and can eliminate storage costs.

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 title of the grain is transferred.
  • The delivery of the contract is mandatory.
  • Payment is not received until basis is set and the grain is delivered.

Delayed Pricing (DP)

This contract allows a producer to move grain to a CHS Northland Grain 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.

(NOTE: BASED ON AVAILABLITY ONLY. PLEASE CONTACT US TO DETERMINE IF THIS PROGRAM IS AVAILABLE)

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 price later may be cheaper than commercial storage.

Disadvantages:

  • Subject to basis and market price risks.
  • 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.

PLEASE NOTE: There is an inherent risk in grain marketing. Grain marketing decisions are the decision of individual producers. CHS Northland Grain assumes no responsibility for grain marketing decisions made by individual producers.

Wheat Protein Scale
based on 14 pro

Current Protein Scales:

November 9, 2017

Plus $.10 per 1/5th at 14.0 Pro up to 15.0 Pro

Plus $.02 per 1/5th over 15.0 Pro

Minus $.08 per 1/5th under 14

SPRING WHT PROGRAMS
Cash or Contract
Minimum Price Contracts
Basis Fixed Contracts
Compass Contracts

SOYBEAN PROGRAMS
Cash or Contract
Minimum Price Contracts
Basis Fixed Contracts
Compass Contracts

CORN PROGRAMS
Minimum Price Contracts
Basis Fixed Contracts
Compass Contracts

HEDGE CONTRACT FEES
17 Crop: Corn -.02 Wheat & Soybeans -.02
18 Crop: Corn -.05 Wheat & Soybeans -.05

© 2017 CHS Inc.