Fixed Basis

A Fixed Basis (FB) contract allows you to secure a basis level without specifying the futures price, and establishes a quantity, grade and delivery period for your grain.

Benefits: The Fixed Basis contract reserves space for future delivery It also protects you against adverse movements in the basis level The contract allows you to remain in the market to benefit from futures price increases You can roll the basis forward, gaining more time in the market to take advantage of market price increases The contract eliminates quality risk once the grain has been delivered

Risks: The basis level may improve after establishing the contract The futures price may decrease while the contract remains unpriced

 

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.