Grain Marketing Contracts

Sunrise offers a variety of customizable grain contracts that allows each farm to individualize and create a plan that works for your specific operation. Click on the contracts below to learn more.

Priced Contracts

A contract with a fixed price, meaning final price with no variance, with specific delivery requirements. 

 

Why choose a Priced Contract? 

The advantages to a Priced Contract are the quantity and price of grain is fixed and has no further price risk. The quality risk is passed to the buyer upon delivery, and there are funds available after the contract has been completed.  

If a Priced Contract is chosen, pricing flexibility and delivery are eliminated and there is no chance for further price increases.

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.


 

Basis Fixed Contract

The Basis Fixed contract allows a producer to price enrolled bushels equally across a predetermined pricing period. This pricing period coincides with historically good times to price new crop grain, when the market is signaling what crop it wants planted or when it experiences potential planting issues or delays. 

 

Basis Fixed Contract 

This is a formula price contract. The formula to determine price is: basis + board of trade price. At the time of contracting, the basis is established, and final price is then determined when the board price is set. Board price must be set prior to expiration date in the contract. BF contracts may be rolled forward to another board contract month, at the spread between the futures months, plus a fee for a contract change.

The advantages to a Basis Fixed contract are the downside basis risk is eliminated, the producer may take advantage of future CBOT rallies and may avoid a weak (harvest) basis or low flat price. The producer can receive an advance of 50% of contract value (ex. $2.00 cash price: advance $1.00 per bu.). The product quality risk passes to buyer, and the producer avoids storage or price later charges. There are no minimum bushel requirements.
 
If this contract is chosen, the future basis improvements cannot be realized. You remain subject to the risk of changes in the CBOT futures prices. This contract also requires knowledge of local historical basis.
 
There is risk in Sunrise Cooperative asking for additional equity in case cash values fall below advancement levels.
 

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.


 

 

Hedge-to-Arrive (HTA)

This is a formula price contract. The formula is: basis + board of trade price. At the time of contracting, the board price is established, and final price is then determined when the basis is set. The basis must be set prior to time of delivery or before the contract expiration date.
 
 

What is an HTA? 

This is a formula price contract. The formula is: basis + board of trade price. At the time of contracting, the board price is established, and final price is then determined when the basis is set. The basis must be set prior to time of delivery or before the contract expiration date.

The HTA contract takes advantage of high futures levels, leaving opportunity for basis to improve. Futures downside price risk is eliminated, and the producer has no margin calls or exchange fees.

When an HTA contract is chosen the producer is open to basis-level widening, cannot take advantage of futures rallies and cannot trade in and out of HTA contracts as with futures contracts. The delivery of the contract is mandatory and payment is not received until basis is set and the grain is delivered.

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.


 

Minimum Priced Contract

This contract establishes a guaranteed base price protecting you against lower prices, but permits participation if the market rallies. The final price will be the minimum price plus any value the option provides if the market rallies prior to the expiration of the option. 

 

What does a Minimum Priced Contract do? 

This contract establishes a guaranteed base price protecting you against lower prices but permits participation if the market rallies. The final price will be the minimum price plus any value the option provides if the market rallies prior to the expiration of the option.
 
  • Set futures by entering into an HTA or Priced Contract
  • Buy a call option at or out-of-the-money
  • Minimum Price is the futures price minus the premium paid and basis
The advantages of a minimum price contract are the risk of CBOT futures price decline is eliminated yet allows the opportunity to participate in higher futures prices if the market moves higher prior to the contract’s expiration date. The minimum price is guaranteed and paid in full upon completion of delivery. There are no upfront premiums - Sunrise covers the premium and deducts it from the final price. Producer’s premiums are based on CBOT traded options and they have the ability to roll up to higher strike prices if the market rallies to increase the Minimum Price floor and still participate in further market appreciation. This contract is very safe, and costs are easily identified.
  
A minimum priced contract does not permit trading in and out of markets as delivery is required. Depending on option prices and volatility, it may cost more than storage rates and at the time of contracting, the minimum price level may be less than forward contracting. This contract also requires selling in 5,000-bushel increments.
 
What are the costs associated?
  • To initiate a minimum price contract, it costs $0.02/bu for corn and $0.04/bu for soybeans.
  • The new rolling feature that allows you to improve your minimum price if the market rallies costs $0.01/bu for each roll. The amount of times you can roll your strike price is not limited.
  • If the option is in-the-money and you elect to exercise the option to improve your final price $0.02/bu will be deducted from the option value. 

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.


 

 
 

Delayed Pricing

This contract allows a producer to move grain to a Sunrise Cooperative location without establishing any price. Charges vary with market conditions. 

 

What is Delayed Pricing? 

This contract allows a producer to move grain to a Sunrise Cooperative location without establishing any price. Charges vary with market conditions.

It is important to note that, unlike storage, title to the grain passes to the buyer upon delivery. Producers will not be able to use price later grain as collateral for government loans or Loan Deficiency Payments (LDP). Service charges are based on market differentials (carries/inverses) and may or may not be less than storage charges.

A Delayed Pricing contract can make delivery while avoiding historically low (harvest) prices. The emotionalism of pricing is separated from the physical handling of the grain, the producer does not need on-farm storage, and delayed pricing may be cheaper than commercial storage. Quality risk passes to buyer upon delivery.

Delayed Pricing contracts are subject to basis and CBOT price risk. There is no payment until contract is priced and this is not storage. The title passes to the buyer and you are unable to get a CCC loan or LDP once put into price later.

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.

Price Targets

Producers may enter into an agreement, whereby they make firm “offers” to enter into a cash grain contract with Sunrise Cooperative. We will then “accept” that offer if market conditions allow. 

 

Price Target Contract 

Price targets can be reached if you are not able to monitor the markets minute by minute. This contract takes advantage of short-lived day rallies, if your offer is working in the Sunrise target system. If you have a price goal in mind, this contract puts it in writing and gives you something to watch and monitor. Any price amount and bushel quantity can be offered and offers can be used to price cash, storage or new-crop delivery grain. Offer to sell may be cancelled by seller anytime, providing notice has been received by buyer prior to offer being filled.

If a price target contact is chosen the grain will be priced at an offer, and if the market rallies past the set offer, additional gains will not be realized. Putting offers to sell at even dollar amounts can sometimes be costly. An example is an offer to sell $4.00 corn, and the price tops at $3.99; then the market falls to $3.50. Fails to “pull the trigger.”

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.

 
 

Structured Grain Contracts

A Structured Grain contract works, looks, and feels exactly like a standard HTA, with the flexibility of adding features such as averaging, stop protect levels, resets, and additional quantities to the contract.  

 

Structured Grain Contract 

Structured grain contracts are cash contracts designed to meet the producer’s specific pricing needs. These flexible contracts are customizable and are tailored to fit the producer’s risk tolerance and price biases.
 
Structured grain contracts do involve some added risk such as double-up and knock-out. The producer’s risk is reflected in the price requested.
 

*Offerings subject to change without notice. The above contracting tool involves market risks and may not be appropriate for all producers.

Get Started

Connect with a Sunrise Grain Solutions Advisor to start managing your risk to maximize your return with Sunrise Grain. Get started today. 

There is an inherent risk in grain marketing. Grain marketing decisions are the decision of individual producers. Sunrise Cooperative assumes no responsibility for grain marketing decisions made by individual producers.