PaceSetter® Floor

As with the PaceSetter contract, a PaceSetter Floor contract allows you to receive a price determined by the average of the closing futures prices over a set period of time. However it also provides you with downside protection by establishing a floor price.

You can position PaceSetter Floor averaging periods to take advantage of historical price seasonality. For example, new crop futures for spring tend to have a weather premium built into them to take into account the uncertainty of the upcoming crop year.

With the PaceSetter Floor contract, you can ensure the average futures price over a given period of time on a portion of your production and limit downside risk by establishing a guaranteed floor price. If the final PaceSetter Floor price falls below the guaranteed floor level, you will receive the guaranteed floor price. If the final PaceSetter Floor price is greater than the guaranteed floor, you will receive the final PaceSetter Floor price.

Benefits: PaceSetter Floor guarantees you a floor price PaceSetter Floor allows you to stay in the market for an extended period of time PaceSetter Floor creates the opportunity to take advantage of historical price seasonality You are guaranteed the average price over a specified period of time, reducing the time required to watch the market

Risks: The PaceSetter Floor averaging process protects you from selling at the market low but also inhibits you from selling at the peak of the market The market may increase, then drop substantially prior to the end of the averaging period In this situation the lower market values will be included in the average price, having the effect of lowering the overall average to a limit set at the guaranteed floor price The market may increase following the completion of the pricing period

 

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.