Deferred Delivery

A Deferred Delivery (DD) contract locks in a guaranteed price today for grain delivered in the future. The futures and basis portions of the contract are established at the same point in time. Payment occurs upon delivery or you can defer into a new tax year. Deferred Delivery contracts establish a price in advance of delivery (this is the main difference between a Deferred Delivery contract and a cash sale).

Benefits: It is more flexible than a cash sale (establish price prior to delivery) The timing of pricing and delivery is optimized Establishing a cash price eliminates your downside price risk Deferred payment opportunities are available to assist you with cash flow and tax management

Risks: The deferred price may not cover the cost of storing your grain The futures price and/or basis level may improve after the contract has been established

 

Disclaimer
This marketing alternative overview has been prepared to help you identify the marketing alternatives offered by Cargill, along with the advantages and disadvantages of each. Cargill has used its best efforts to provide you with this useful and helpful information. However, we cannot guarantee that this contract alternative will function in the same way in each and every situation, and information that may be accurate for one farmer may not necessarily prove to be accurate for another. Therefore, we do not make any warranty or guarantee as to the accuracy of any of the information as it is applied in a particular marketing strategy. Entering into any of the transactions outlined on this site will not result in your opening a futures account with Cargill or otherwise, nor will you obtain a futures position. The only futures position relative to any transaction, if one exists, will be held by Cargill. This and other contracts may employ the futures market as a grain pricing mechanism, but the contracts described are not, themselves, futures contracts.