Grain

Deciphering today’s grain prices can seem like a daunting task in markets that are more volatile than ever. Don’t hesitate to contact our grain marketing professionals to help you find a profitable grain solution.

Cash Bids

Northwest Grain Growers Cash Bids. Prices subject to change at anytime.

Futures

Futures quote board for all commodities traded on the futures exchange.

Weather

See a detailed forecast of what's going on in your area.

Announcements

Welcome to our new Northwest Grain Growers website. We are still working feverishly to fix some of the technical glitches that are bound to occur with a change of this magnitude and apologize for any inconvenience it may cause you. When completely finished, we will be excited to unveil several new features that weren’t possible with our old site including a new place for you to make grain offers electronically and a new NWGG app available for both apple and android products. 

Chris Peha

 

Grain Contracts

Price Contract

A contract with a fixed (final) price for a specific delivery requirement. This contract is also referred to as a "flat price" contract.

Advantages

  • Quantity and price is fixed, with no further price risk.
  • Quality risk is passed to buyer.
  • Money is immediately available.

Disadvantages

  • Pricing flexibility and delivery are eliminated.
  • No chance for further price increases.

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.

Advantages

  • Downside basis risk is eliminated.
  • May take advantage of future CBOT rallies.
  • May avoid a weak (harvest) basis or low flat price.

Disadvantages

  • Future basis improvements cannot be realized.
  • You remain subject to the risk of changes in the CBOT futures prices.

Hedge to Arrive Contract

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.

Advantages

  • Takes advantage of high futures levels, leaving opportunity for basis to improve.
  • Futures downside price risk is eliminated.
  • No margin calls or exchange fees and can eliminate storage costs.

Disadvantages

  • Open to basis-level widening.
  • Cannot trade in and out of HTA contracts as with futures contracts.
  • The title of the grain is transferred.
  • The delivery of the contract is mandatory.
  • Payment is not received until basis is set and the grain is delivered.
  • Cannot take advantage of futures rallies.

BC Minimum Price 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.

Minimum Price using a put option (BP):
* Higher price floor than using a put 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

Advantages

  • 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.
  • Very safe and costs are easily identified

Disadvantages

  • Depending on option prices and volatility, it may cost more than storage rates
  • At the time of contracting, the Minimum Price level may be less than forward contracting

BP Minimum Price 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.

Minimum Price using a call option (BC):
* Lower price floor than using a call option
* Buy a put option that is at or out-of-the-money
* Minimum Price is the strike price of the option minus the premium paid and basis

Advantages

  • Downside basis risk is eliminated.
  • May take advantage of future CBOT rallies.
  • May avoid a weak (harvest) basis or low flat price.

Disadvantages

  • Future basis improvements cannot be realized.
  • You remain subject to the risk of changes in the CBOT futures prices.

Min-Max Contract

A Min-Max contract establishes a minimum price protecting you against lower prices but permitting participation if the market rallies up to a predetermined maximum price using exchange traded options. The final price of the Min-Max contract will be the minimum price plus any value the option positions provide if the market is above the minimum prior to the expiration of the option

Advantages

  • Provides a price floor
  • Has a reduced cost when compared to a Minimum Price contract as it offsets high-option premiums in exchange for a ceiling above the market
  • Risk Parameters are known, and costs are easily identified
  • You can set the final cash price at any time during CBOT market trading hours

Disadvantages

  • The upside potential price of this contract is limited to the maximum price
  • Requires selling in 5,000-bushel increments
  • Depending on option strike prices and volatility, it may cost more than storage rates

Target Price Agreement

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

Advantages

  • Price targets can be reached if you are not able to monitor the markets minute by minute.
  • Takes advantage of short-lived day rallies, if your offer is in the quote system.
  • If you have a price goal in mind, it puts it in writing and gives you something to watch and monitor.

Disadvantages

  • 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 $6.00 wheat, and the price is $5.99, then the market falls to $5.50. Fails to “pull the trigger.”