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| Your PL charge is on based the carry in the market.
Best time to use PL is when you think the carry will widen (end up being more than the intial PL/DP charge) or are just generally bullish and dont have storage available. Another item to consider is if you have quality concerns, becuase you get the discounts across the scale in the fall, NOT in the deferred slot, like you would if you hauled in it in from a bin the spring/summer.
Fonzie- good point about them not paying before using it. I think there is a rule in some states that requires them to at least have the market value of their outstand PL bushels in inventory (dont think it has to be same commodity).
Edited by illini81 9/23/2010 13:23
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Price Later Contracts
