Basis Fixed Contract

Execution:

1. Contact your local FFGE elevator to establish a delivery date, bushel amount, basis level, and pricing time frame
2. Establish futures price or roll contract by First Notice Day
3. Deliver grain as agreed in delivery timeframe

Strategy:

This contract should be used to lock in a favorable basis level and allow time for the futures market to appreciate.

Generally, when the futures are low, the basis will be high.

Advantages:

• Eliminates downside basis risk
• Can eliminate storage costs and risks
• Allows pricing flexibility in the futures
• Can be rolled within the same crop year

Disadvantages:

• Full payment is not received until the futures level is established
• Delivery is required
• Open to futures price risk
• Requires historical futures and basis knowledge

Fees: None