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GPC Muscatine Basis Unpriced Contract
| Contract Options | - A Basis Unpriced contract allows the shipment of any quantity of grain on an agreed upon basis value for a specific delivery period.
- In order to observe state law this contract needs to be signed, dated and returned prior to delivery.
- The contract must be delivered and priced within the same crop year. No Basis Unpriced contract will be allowed to remain unpriced beyond the expiration of the CU option in a given crop year.
- Contracts must be priced or rolled on or prior to the first notice day the obligation has been written against. If at that point no direction has been given GPC will price contract on the CBOT close of the day.
- Once roll at a 2c per bushel fee is allowed per contract.
Example:
A producer is incentivized to capture a nearby basis premium but does not like the current futures price. In order to lock in the strong basis value the producer elects to enter into a 5000 bushel basis contract with GPC for week 2 April delivery at +5, CK futures are trading at $3.75 making cash $3.80.
The grain is delivered during the second week of April and the contract remains unpriced until the third week of May at the discretion of the producer. At that point CK futures have appreciated 30c from the time the contract is written and are now trading at $4.05. The producer elects to establish a futures value and the final cash value of the obligation is now $4.10. | |
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