Introduction to Grain Contracts

This short video will give you an overview of our grain contracts and the best way to make use of them.

Full Transcript

NARRATOR: Welcome to the Cargill Marketplace. What brings you here today?

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SUPERIMPOSED TEXT: I’m concerned about my cash flow and storage. I worry about production and managing risk. And I want to sell my grain at a good price.

NARRATOR: The Cargill Marketplace is meant to help growers who are looking for ways to become more proactive about marketing their grain. And let me assure you – we can help. Our various grain contracts provide you with the tools to better manage grain movement and cash flow, lessen downside risk and take advantage of upswings in the futures market.

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SUPERIMPOSED TEXT: How so?

NARRATOR: Well, to start, we should really discuss the differences between basis and futures pricing.

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SUPERIMPOSED TEXT: But that’s pretty basic stuff.

NARRATOR: Yes, it is. But when marketing grain, often growers will focus on basis, even though it only accounts to 10 to 15 per cent of the price. At the same time, they’re apprehensive to think about how the futures market impacts their final grain price, in spite of the fact that it makes up the remaining 85 to 90 per cent.

Compare it to owning a truck. Each oil change likely costs pretty much the same amount. There might be a slight increase or decrease in the price, but nothing terribly noteworthy. That’s like basis. But each time you fill the tank with gas, the price may be noticeably different. Gas prices are notorious for dramatic drops or spikes in a relatively short period of time. That’s similar to the futures market.

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SUPERIMPOSED TEXT: So what does this mean?

NARRATOR: Well, since such a significant portion of the selling price of your grain comes from that futures market, and since the fluctuation in the market is much grater than that of the basis, it’s beneficial to devote more effort and attention to the future.

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SUPERIMPOSED TEXT: Okay, so where do you come in?

NARRATOR: We help you navigate the futures market with contracts that take advantage of higher price levels and protect against the lows. We also know that marketing your grain means more than just selling at a good price.

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SUPERIMPOSED TEXT: How so?

NARRATOR: Our contracts can give you more options for managing your inventory and cash flow and provide a variety of strategies to protect against futures market drops and benefit from market increases.

The best part is that whatever your level of understanding, experience or interest in the futures market, and whatever unique challenges you face on your farm, we have a grain contracting solution that’s right for you. We can help you review and select the right one.

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SUPERIMPOSED TEXT: What’s my next step?

NARRATOR: The first thing is to begin learning about the benefits grain marketing contracts can provide. You can browse our MarketPlace as it contains information on how to use each contract to meet your goals.

Next, give our Marketing Simulators a try. They’ve been created to mimic real world conditions without having to commit any grain. Finally, if you like what you see, talk to your Cargill representative on how we can move forward together.

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