MINIMUM PRICE CONTRACTMinimum Price Contract • January 2nd, 2002
It’s October and you are harvesting corn. The bins are full, prices are low and you feel prices will advance sometime in the next 8 months.
A contract to sell grain that establishes a minimum price while offering the flexibility to capture unlimited upside opportunity if the market improves.Minimum Price Contract • May 16th, 2019
The producer agrees to sell a specific quantity of grain for a specific delivery period at a given price. The minimum price is determined by subtracting the cost of the upside participation from the contracted price. Upon delivery the producer will receive the pre-established minimum price, unless the market is above the participation level at delivery. The producer may receive some or all of the market improvement above the participation level.
Minimum Price ContractMinimum Price Contract • March 14th, 2012
The goal of a minimum price contract is to allow producers to set a minimum price received while still having the opportunity to realize a gain in a rallying futures market. A minimum price can be set anytime from contract inception to a date specified in the contract. The minimum price is equivalent to the current cash price less the option premium and the service fee. A Minimum Price Contract gives the producer flexibility by allowing the producer to receive a 100% advance equivalent to the minimum price and the opportunity to realize a further gain with a positive futures market move. This type of contract is a good opportunity for producers who want to protect themselves against falling prices but still have the opportunity to take advantage of an increase in futures prices. Title of the grain passes upon application to the contract. AgMark has X cent/bu service fee on Minimum Price Contracts and requires increments of 5,000 bushels.
How it WorksMinimum Price Contract • October 30th, 2021
The Minimum Price contract involves selling your commodity today at the current cash price, paying a small fee to establish a floor, and remaining in the market to take advantage of any upwards movement in prices. You can choose where to set your floor by choosing a call option strike price and how long you want to remain in the market by selecting a futures month. You may offset this position at any time prior to the strike date. This contract is best applied to old crop bushels stored in the elevator. This contract can only be applied in 5,000 bushels increments.
