Minimum Price Contract

A minimum price contract allows a producer to set a minimum price that he will receive while still being able to take advantage of any future market rallies.

Advantages:

  • This contract allows the producer to set a price with all costs defined.
  • Receives cash upon delivery of grain.
  • Very flexible, can be used on new crop, old crop, or up to 30 days after your grain has been sold.
  • Stops storage.
  • Improves cash flow.

Disadvantages:

  • Premium and service charge may be costly.
  • Producer loses basis gain opportunity.
  • Must continue to track option price to get full value of contract. (You may use an offer contract to set the price of your option)