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Mercer Landmark, Inc.
Mercer Landmark :: Grain :: Cash Plus

What is Cash Plus?

The Cash Plus Contract provides producers with a premium or a “push” in the price of old crop grain in exchange for a firm offer on an equivalent number of new crop bushels at a specific strike price. This is a great way to enhance old crop bushels while making a new crop bushel offer at beneficial levels.

One advantage of this contract is that it can be done for any quantity of bushels; no minimum of bushels required. In addition, the expiration dates in these contracts can be chosen in a manner that allows producers to know their new crop obligations prior to harvest – a critical factor in everyone’s marketing plan.

This product helps level out price risk with alternative cash contracts that simplify both decision-making and execution. Cash Plus Contracts price themselves over a specific period of time and are simply initiated by signing up current bushels.

Cash Plus Contract—Example
Old Bean Bid $3.62
Futures Contract December 15 (CZ15)
Current Futures Price December 15 $4.14
Strike Price $4.40
Expiration Date October 28, 2015
Premium $0.18
Cost $.02 (Service Charge)
   
Potential Results
Old Crop  
Old Bean Corn Bid $3.62
Premium $0.18
Net Cash Price to Producer $3.78
New Crop  
Scenario 1
If CZ15 futures are at or above $4.40 at the close of trade on October 28, 2015 futures pricing will occur for new crop corn at $4.40. This could be an HTA contract or be the pricing of an existing basis contract.
Scenario 2
If CZ15 futures are below $4.40 at the close of trade on October 28, 2015 no new crop futures pricing is created. The producer keeps the premium received on the old crop bushels.

Contact us for more details:
Anna Kaverman at (419) 769-5403

For questions or comments, contact webmaster@mercerlandmark.com.