Forward Delivery Flex Contract

A forward delivery flex contract gives the producer the opportunity to lock in a new crop price with the flexibility to enhance your price one time if the market rallies.  If the market drops you can deliver at the lock in price.

Advantages:

  • Very flexible, giving the producer the ability to lock in a good price while still giving him the ability to get a better price.
  • Until the contract is "flexed" for a higher price, the contract allows the producer to walk away from the contract with the only cost being the premium cost of the contract.
  • Still allows for possible basis gains.
  • Can be used in conjunction with other contracts.

Disadvantages:

  • Can be confusing when looking at all options.
  • Service charge may be too costly.
  • Have to pay premium up front.