CHS SunPrairie offers several different contracting options. Learn more about each contract type and how they work to see which is the best for you and your operation. Please call any of the CHS SunPrairie merchandisers if you have any questions.
Cash contractsHedge-to-arrive (HTA) contractsBasis contractsMinimum price contractsDelayed price (DP) contracts
These contracts allow the grower to lock in the full price for their grain today for either immediate or deferred delivery.
How does it work?
Grower agrees to deliver a specific quantity and quality of grain for a determined delivery period. Grower is paid CHS SunPrairie’s board price for their grain on the day it is sold.
Cash contract advantages:
Cash contract disadvantages:
These contracts allow the grower to lock in a futures price, for futures traded commodities, and price their basis at a later date.
Grower agrees to deliver a certain quantity and quality of grain during a set time period. The producer chooses the futures price level and the basis remains open and un-priced until it is set; on or by the date specified on the grower’s contract with CHS SunPrairie.
HTA contract advantages:
HTA contract disadvantages:
These contracts allow the grower to lock in their basis on their contracts but lock in futures at a later date.
Grower agrees to deliver a specific quantity and quality of grain for a determined delivery period. The basis is locked in on the contract at this time. The final price of the contract is determined at a future date, as indicated on the grower’s contract with CHS SunPrairie, by locking in the futures price and adding/subtracting the basis value on the grower’s contract.
Basis contract advantages:
Basis contract disadvantages:
This contract allows the producer to sell cash grain and continue to participate in the market for an investment.
The grower sells cash grain today and for an investment (determined by the market) chooses a month to “participate in the market” up until the end date for that specified month. This contract has unlimited upside potential. At any time during the life of the contract a grower may choose to reprice the contract if it has reached a desired level.
Minimum price contract advantages:
Minimum price contract disadvantages:
Sell 10,000 bushels of Minneapolis Spring Wheat off combine for $5.72 (6.57 futures -.85 basis) and you want to participate in the month of March. We determine your investment to participate is $.20. You would receive a check for $5.52 (todays cash price minus investment) and have the potential to capture any upside in the market until Feb. 23 (month of March end date.)
These contracts allow the grower to haul their grain today but to price it by a date established by CHS SunPrairie.
Grower hauls their grain to CHS SunPrairie but does not like the cash price at the time. The DP contract allows the grower to move grain and wait to lock in a price until the contract reaches its expiration date or prices become more attractive and the grower sells.
Delayed price (DP) contract advantages:
Delayed price (DP) contract disadvantages: