Forward Contracting
Forward contracting is selling grain ahead of harvest at a pre-determined price.
There are two parts to forward contracting...
Part 1: TARGET CONTRACT
A target contract is a standing order with Buchheit to sell your grain at a specific price if and when it comes avaliable. A target contract can be placed with Buchheit up to 18 months before harvest. When the target price is reached- your grain is sold and Buchheit will notify you of the sale.
Part 2: FORWARD CONTRACT
Once your target price is reached, the target contract becomes a forward (priced, not paid) contract. This just means that Buchheit has purchased your grain for $X.XX, but you will not be paid until that grain is delivered.
The benefits...
The one habit of successful farm marketers is SETTING AN ACHIEVABLE GOAL AND STICKING WITH IT! Forward contracting is the best way to put that habit into practice. Forward contracting will help you remain disciplined and follow through with our marketing plans. The biggest benefit of forward contracting is the fact that you don't have to worry about missing the opportunity to sell at a profitable level because your contract will be there waiting when selling opportunities occur!
FORWARD CONTRACTING...
ALLOWS YOU TO REACH YOUR GOALS
SEPERATE YOURSELF FROM FARMERS IN THE CASH MARKET
MAKE PROFITABLE SALES AND THEN GROW GRAIN TO FULFILL THE SALE
ELIMINATE FARMING'S BIGGEST COST: P R I C E R I S K