Marketing Programs

Topflight Grain offers several marketing programs, designed to complement your marketing plan. These programs create diversification in marketing, spreading risk between several strategies. If one, or all, of these programs, interest you, we suggest that you commit a portion of your production to the program and that you market some grain through your plan.

To protect the investment in your crop and its marketing, Topflight Grain also offers crop insurance, assistance, and coverage.

Topflight Grain Marketing Pool

Each year Topflight Grain offers to its patrons a Marketing Pool in which producers can commit a specified number of bushels for the Topflight staff to market. 570,000 bushels of corn & beans have been enrolled in the 2020 Marketing Pool. Some of the features of the marketing pool concept:

1. The Topflight staff makes all marketing decisions.
2. The only charge is the service fees on options we purchase, and this cost is part of the contract price.
3. Conservative risk management strategies will be used to accomplish pricing of the grain.
4. Participants will be provided an update on the pricing progress of the pool bushels as the year unfolds.

Sign-up for each program year concludes on December 31, before the new crop year. Please contact your local Topflight office for more information.

Average Price Contract

The average price program markets corn & beans during the historical contract highs. These contract highs typically occur during the winter and spring months prior to harvest. Taking advantage of this opportunity, the average price contract sells equal portions of grain each week. Corn prices are established during the period from January-June. Bean prices are established during the period from January-early August. Payment for the Average Price Contract can be made after delivery during harvest or deferred to January. At the end of the pricing period, the producer may choose to purchase a call option, as up-side price protection on the contract. Approximately 1 million bushels of corn & beans have been enrolled in the 2020 Average Price Program.

If you prefer a customized average price contract, Jon Carr at Milmine can create a program just for you, based on your time frame. Call Jon at 217-763-6311, to create your personal customized average price contract.

Sign-up for the average price contract concludes on December 31, before the new crop year. Please call the Monticello office, at 1-217-762-2163, for more information, or contact your local Topflight office.

Crop Insurance

The protection of crop insurance is required by many lenders and the FSA, as well as being a risk management tool chosen by many producers. As with most insurances, crop insurance provides various levels of protection at various costs.

Crop insurance information and coverage are available in Topflight’s office in Monticello, through Derrick Bruhn, and in the Bement office through Andy Lawhead. They have studied the programs available, and have information to assist producers with decisions, based on levels of coverage and the cost for that coverage. All producers are welcome to discuss crop insurance needs with Derrick or Andy. Coverage may be purchased from them, or through another crop insurance agent. Either way, they will be happy to assist you.

If you would like assistance through the Internet, the University of Illinois farmdoc website has a very informative section at www.farmdoc.illinois.edu/cropins/index.asp.

****Commodity trading is risky and Topflight Grain Cooperative assumes no liability for the use of any information contained herein. Past financial results are not necessarily indicative of future performance. Neither the information, nor any opinion expressed, constitutes a solicitation to buy or sell futures or options on futures contracts, or OTC products. All rights reserved.

Topflight Grain Contracts

Cash Forward

Minimum / Maximum Contract

• The goal of the Minimum / Maximum Contract is to lock in a cash floor price while providing for limited upside market potential. The minimum price is increased by selling the maximum price. There are no storage charges and the minimum price is advanced at the time of delivery.
• The price of the contract is the cash price for the specified delivery period less the cost of locking in the upside potential (cost of call purchase less the call sale).
• The producer risk will be limited on the downside to the minimum price. On the upside, the producer has a limited potential gain.

Futures Only Contract

• This tool allows the producer to lock in a futures price, but not a basis level.
• It is used when the futures price meets the objective, but basis appreciation is expected.
• A futures month and price are established, then the buyer has the option to establish the contract basis at a later date before delivery.
• The fee for corn contracts is ½ cent/bushel/month from date of contract to futures delivery month. The fee for bean contracts is 1 cent/bushel/month from date of contract to futures delivery month.

*contract basis must be established prior to delivery

Put Cash Contract

• The goal of the Put Cash Contract is to lock in a futures floor price with no basis established, while providing upside market price potential.
• The Contract Price is the future price chosen (strike price) less the cost of locking in the floor (cost of the put), less the service fee. If prices rise above the futures price, a higher contract price can be captured.
• The risk to the producer, once the contract price has been established, is basis changes.

Price Later (Delayed Pricing/DP) Contracts

• A price later contract allows the producer to establish final pricing at a later date.
• Payment is made in full when grain is priced.
• Upon delivery, the title of the grain passes to the buyer. Price later (DP) is not storage or warehouse receipt.
• A price later contract will be issued after delivery is complete. It must be signed and returned immediately to meet the requirements of the Illinois Department of Agriculture.

Minimum Price Contract

• This tool is an options-based contract which establishes a minimum price guarantee but allows upward price enhancement.
• This tool is used when the market provides a net flat price which meets the producer’s objectives, but the producer still feels prices have a good chance of improving.
• Guaranteed minimum price is established at the time contract is written based on the option used and the period for which grain was sold.
• Payment is made at the time of delivery. If the contract price is later adjusted due to higher futures price and a premium is due to the seller, a second payment will be issued.
• The contract must be priced during marketing hours.

Basis

• This contract is a form of a futures contract where the basis is established, but a futures price has not been locked in.
• It is issued when the producer feels basis levels are strong but that futures prices could improve. It is also used when a producer expects higher prices for grain but needs to generate cash flow and is willing to give up some basis appreciation.
• When a contract is written, a basis level with the futures month is established. The buyer has the option to establish the futures price to be used for final pricing at a later date. This must be done before the first notice day for the established futures month and during Chicago Board of Trade hours.

Accumulator Contract

This type of contract allows producers to price bushels above the market price, if certain conditions are met. Contents of the contract include an accumulator futures sale price, a knock out barrier, and a specific pricing period. The accumulator futures sale price is set above the market, the knock out barrier is below the market, and the pricing period will be a specific time frame. Pricing will occur in equal amounts as determined in the contract at the accumulator futures sale price. Within the contract parameters, if the market falls below the knock-out price, pricing is finished; if the market price closes above the contract price, the amount of bushels being priced will double. The parameters for these contracts change as the market fluctuates. The fee for these types of contracts varies; please contact your local Topflight office for more information.

• All grains delivered to Topflight Grain shall be of merchantable quality, free of varieties that are not approved for sale in Japan, Mexico, the European Union, or other US export markets, unadulterated, and unrestricted from movement in Interstate Commerce within the meaning of the Federal Food, Drug & Cosmetics Act, EPA tolerances, the US Grain Standards Act and applicable state law.
• All rates are subject to change without notice.