Marketing Your Grain with Tony Martens

Market Insights podcast

• 1. Grain Terms
  • Basis
    • Difference between cash price and the futures month we’re talking about
    • EXAMPLE: December futures were trading at $3.58 and cash price was $3.18 so basis is -40 or 40 under futures
    • Other basis terms:
      • 1. Nearby: futures month we’re pricing cash sales on so right now were basing CORN – DEC & BEANS – JAN
      • 2. Deferred: any month that’s not the nearby for corn it would be MARCH, MAY or JULY
  • Discount
    • Anything that is deducted from cash price of grain when you deliver it
    • Moisture discount
      • Corn will be discounted when sold to us, dried down to 15% at 4.5cents per point and 1.4% shrink
      • Storage would be at 14% at the same price, just at a lower moisture level
  • FM – foreign material
    • BCFM (broken corn)
    • #2 yellow corn is 3% or less
    • Damage corn would be allowed 5%
  • Cash Sale
    • We offer anyone to sell grain over the scale – based on live pricing
    • Will always have a posted bid, doesn’t matter if the markets are open or not
• 2. Market Hours
  • Futures electronically between 7PM until 7:45 AM and then resumes 8:30AM – 1:15PM
• 3. Storage
  • Open
    • You bring in grain to UFC and get warehouse receipt
    • Retain title to that grain
    • 4 cents per month
    • During harvest we do run a minimum, this years minimum was 16 cents
    • Can apply to forward contracts
  • Delayed Pricing – DP
    • 3.5 cents per month
    • You as a producer no longer retain the title
    • No warehouse receipts 
    • Can’t apply to forward contracts
• 4. Contracts
  • Cash Sale
  • Cash Price
    • Cash sale that the producer makes for some time in the future
    • Set the basis and futures at the same time for some time in the future
  • HTA – Hedge to Arrive (Futures Fixed Contract)
    • Locking the futures in 
    • Utilize a year or two out
    • 1000-bushel increments
    • Basis is left open
    • Would have to set the basis when the grower delivers
  • Basis 
    • Set the Basis and leave the futures open
    • Can set basis for the deferred as well
  • Other – only available in 5000-bushel increments
    • Minimum Price Contract
      • Sell grain for cash value today and use a portion to buy a call option in the future months at some point
    • Premium Offer
      • Sell cash grain today and we add an amount to it for selling a call option in the future
      • If the futures market trades above the strike price, you could end up with a HTA deliverable to UFC
• 5. Carry 
  • Difference between nearby futures contracts and the deferred month
  • Examples
• 6. Buy it on Paper
  • One of two ways
    • Minimum price contract
    • Buy straight futures
• 7. How can you sell grain to UFC?
  • Need an account with UFC
    • Filling out a credit app
    • Can put it under a temp account
  • Can dump grain if you don’t have an account, but to get paid you will need an account
  • Brownton has a card reader
    • Can be made in a few minutes
• 8.Locations
  • Brownton
  • Litchfield
  • Klossner
  • Lafayette
  • Winthrop
  • Le Sueur
  • Cologne
  • Bird Island
• 9.What grain do we take?
  • 99% is Corn and Soybean
  • Wheat in season
    • Lafayette
    • Klossner 
    • Le Sueur
    • Please Call ahead
  • Limited basis by Oats
• 10.How to mitigate risk
  • Do as much research as they can
  • Can call and talk to anyone in
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