If you feel there is a potential for future prices to improve, but basis levels may get worse, a Basis grain contract allows you to lock in only the basis portion of a cash contract for a specific delivery period. With the basis set, you can wait until a later date to set the futures reference pricing portion of your cash contract. Basis contracts may also allow you to receive a payment advance on an estimated portion of the contract value for the grain that has been delivered.
Note that entering into a Basis contract does not result in the seller opening a futures or options account or having a futures or options position. Any futures or options position taken by a buyer is for the benefit of the buyer only and shall be in the buyer’s name. Futures and/or options may be employed as a grain pricing mechanism. This contract is not a futures or options contract or a commodity pool agreement.
ADM products and services vary by location.
How it Works
Here’s how Basis works for you:
- Working with an ADM representative, you lock in the basis for a specific delivery period.
- If you wish, you may be able to receive a partial cash advance after delivery has occurred.
- You set your final futures reference price prior to the deadline provided by the contract terms.
- You deliver your grain within the contracted period and receive the contracted cash price (minus your cash advance, if applicable), which is the Futures Reference Price +/− Basis.
- Helps you actively manage your final grain price
- Helps diversify your marketing
- Allows you to take advantage of favorable basis
- Can improve cash flow, if needed
- Maintain flexibility in your forward marketing
Please contact me so we can have a conversation about this grain contract.