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| Everyone in the major marketplace has a bin program now Cargill, Consolidated Grain, ADM, and even regional companies have added them to the portfolio now. They work well if you understand to advantages and limitations to them. Everyone has a little twist to the basics of the program. But it is options based on the part of the originator giving a 3 year commitment of bu from the producer. In turn they either buy a shell (cargill) or pay x number of dollars or cents per bu each year(CGB), not sure of ADM's twist at this time. On the bu commitment the producer has a "strike price" and "strike date" for example if the Board of Trade is 3.20 or higher on the close of the day on Sept 15 your futures are priced and you have to set basis. If the close that day is under 3.20 the futures are unpriced and you still have the bu commitment.
This is probably about clear as mud. The major hang up is about 2-3 years ago when Cargill opened this program the strike prices were set around the 2.70-2.80 range which at the time was good, after last falls run up producers were unhappy with this level since they could sell cash a dollar higher than that (this is what I mean by knowing the limitations) | |
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ADM Grain Bin Program
