MARKETING BASICS  Markets Index

 

CASH SALE

  • An agreement between the producer and Ganaraska Grain to pay a certain price for a certain quantity and quality of grain.
  • Payment is either immediate or can be deferred for tax planning.

 

FUTURES CONTRACT

  • An agreement between yourself and Ganaraska Grain to pay a certain price for grain to be delivered at a future date.
  • Useful to lock in a price for new crop commodities.
  • Useful if the price for grain is attractive to the producer now but delivery is not convenient or possible.
  • The producers are at risk to grow or store the grain they contract.
  • Price risk and gain is passed on.

 

DEFERRED PAYMENT 

Deferred payments are now permanently allowed under the Grain Act.

All deferred payments under 180 days are eligible for declining coverage under the insurance provisions of the Grain Financial Protection Program.

The dealer will be required to provide the producer requesting the deferred payment with written confirmation of:

  • The date on which the deferred payment arrangement was entered into,
  • The date or dates on which payment is to be made, and
  • The amount of each payment and the total amount of all payments. 

The initial payment for Basis Contracts has changed from 75% to 60%.

Elevators/Dealers will have five (5) trading days to pay for Grain Sold Out of Storage which has changed the terms of payment from 2:00 p.m. the next trading day to 2:00 p.m. on the fifth trading day.

 

BASIS CONTRACT

  • An agreement between the producer and Ganaraska Grain to determine the difference between the futures price and the net price they will receive.
  • Useful if the basis level is attractive, however, the producer believe's the futures level will increase.
  • While the basis component of the producer's net price is determined the risk and gain of futures price movement is their's.

1. Upon delivery of grain against an open basis contract, the seller is entitled to an advance of funds equal to 60% of the cash value of the grain using the current value of the designated futures month. Any charges owing to Ganaraska  will be deducted from the advance in full. Once Ganaraska charges are satisfied, any amounts owing by the seller for crop loans and advances will be deducted from the gross advance.

2. Ganaraska reserves the right to limit pricing of Basis contracts subject to when the Chicago Board of Trade is open and trading.

3. All basis contracts must be priced prior to the first notice day of the futures month designated in the contract, unless otherwise stated or unless switched.

4. Basis contracts not priced or previously switched will be switched to the next futures month at our discretion prior to the first notice day of the designated futures month. The next futures month will then become the “designated month” for the basis contract. A switching fee of $.04 per bushel will be charged at the time of switching.

5. If at any time the gross advance amount exceeds 95% of the cash value of the grain using the current value of the designated futures month a margin call will be triggered. The margin required to be paid by the seller to Ganaraska  will reduce the gross advance amount back to 75% of the cash value of the grain using the current value of the designated futures month.

6. Margin calls will be due within 10 business days from notification by invoice of the margin amount owing. If Ganaraska does not receive the margin amount within the 10 business days, Ganaraska reserves the right to price out the basis contract using the closing Chicago Board of Trade futures price of the designated month on any day after the 10th business day. Any equity or deficit in the contract will be paid or invoiced to the seller, respectively.

7. Sellers who have multiple basis contracts outstanding will have their contracts combined for the purpose of determining margin owing.

 

CANCELLED & UNFILLED CONTRACTS *NEW*

There will be a $0.25 per bushel (of unfilled portion of total tonnage contracted) administration fee.

If the cancelled/unfilled portion of the contract is 5% or less of the total tonnage contracted;

  • Remuneration beyond the administration fee will be null.

If the cancelled/unfilled portion of the contract is above 5% of the total tonnage contracted, the contract will be assessed as follows;

  • If current spot price is higher than the contracted price, the grower is responsible to;
    • Pay Ganaraska Grain the administration fee and;
    • Fill the remaining tonnage by some other method, or
    • Pay Ganaraska Grain the difference between the contracted price and the current spot price per tonne of outstanding contracted grain.
  • If the current spot price is lower than the contracted price;
    • Remuneration by the grower to Ganaraska Grain beyond the administration fee will be null.