FUTURES ONLY CONTRACT

A FUTURES CONTRACT is a contract where the futures level is set, and basis is left open. The futures price is the current price of the futures month being chosen and for a specific delivery period. This contract would be used where the futures look attractive to the producer, but they thought basis was going to improve. When a futures contract is done, grain title is transferred to DMG at the time the contract is established. The final cash price will be determined at some time in the future when the basis is set. Once basis is set, it is subtracted (or added) to the futures to determine the final cash price.

There are numerous futures contracts that could be established with various delivery options. Call your local DMG location for details.

ADVANTAGES: The contract can take advantage of an improving basis but Delayed Price charges may apply until basis is set.  

DISADVANTAGES: The contract is tied to a specific futures month and exchange; have price risk through basis exposure; contract is not protected by any statutory warehouseman's bond or grain dealers' bond coverages.  No advance is given on futures contracts.