Rather than settle for the current market price, the Price Accumulator grain marketing contract can help you achieve strategic price targets to establish your futures reference price. This enhanced daily averaging contract lets you sell additional quantities of grain on days where the futures prices exceeds your target. You can also select a guaranteed minimum price or stop pricing altogether if the market drops below your chosen floor price.
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How it Works
Price Accumulator contracts are available as non-guaranteed or guaranteed. In both contracts, you set an Accumulation Hedge Level and a Knock-Out Level. During your pricing period, an equal portion of your grain is priced each day the market settles between your Accumulation Hedge Level and Knock-Out Level. On days that that market settles above your Accumulation Hedge Level, twice the amount of daily grain will be priced at your Accumulation Hedge Level.
If the daily market closes below your Knock-Out Level, there are two possible scenarios. With a non-guaranteed contract, pricing stops. Your final contract price is determined based on the bushels already priced and the remaining bushels are released from the contract. With a guaranteed contract, all of your remaining bushels are priced at a pre-determined Guaranteed Price Level.
Here’s how to put Price Accumulator to work for you:
- You choose the number of bushels you want to price, the time period in which pricing for a specific commodity will occur and a delivery period.
- You decide if you would like to add a Guaranteed Price Level to the Price Accumulator contract.
- When the pricing period concludes or if your Knock-Out Level is reached, your final futures reference price will be established.
- You set the basis at any point prior to delivery.
- You deliver your contracted grain and receive the final cash price. The final price is equal to the Final Futures Reference Price +/− Basis − Service Fee + Premium Paid (if any).
- Helps achieve target price levels that may not otherwise be achievable
- Forward marketing helps mitigate risk, making it a critical component to your overall marketing portfolio
- The Guaranteed Price Accumulator option assures a minimum futures reference price for your grain
- Automatic execution minimizes stress and worry
- Price additional grain when the market is favorable