In my post last week, we started a series on one of the most fundamental pieces of grain marketing–understanding a bid sheet. Today, we tackle the first element: the delivery date range.
Anyone else love happy hour? Stick with me here…I promise I’m still on topic.
I personally love happy hour. It’s second to my love for brunch, but it’s a close race. The problem with happy hour is that it’s limited to a specified time frame. Depending on the restaurant or bar, the time frame might be limited to two hours, or it might be an entire Sunday. However, one thing always remains the same–in order to receive the happy hour price, you have to get your order in during the specified time frame. Believe me, the time frame is rigid. I’ve definitely been the person that arrives 5 minutes after happy hour has ended and still asks if I can still get $2 off the house red blend. As expected, I’m typically met with a firm, “No,” as the response. Worth a try though, right?! 🙂
The date range listed on the bid sheet works the same way as happy hour. It’s a no nonsense time frame for your grain to be delivered in order to receive the corresponding cash price.
If the bid sheet shows a cash price of $3.60 for December 1st – 31st, then you have the ability to make a cash sale for $3.60 and have the full month of December to haul in the contracted bushels. If today’s date is within the date range you’re examining on the bid sheet, the price listed for that date range is also the same price you will receive if you deliver grain today and “spot” sell your grain. Spot selling is simply delivering grain and selling it that day with no existing contract.
Let’s look at an example: Your local elevator is paying $3.70 cash for corn delivered in April, which is above your breakeven. You decide to make a forward cash sale for 10,000 bushels.
- You call the local elevator and ask to contract 10,000 bushels of corn for delivery in April for $3.70 cash.
- A few days later, you receive a contract in the mail to sign (or in your online account to e-sign if the elevator has that capability).
- Once signed, you’re committed to delivering those bushels. You can deliver them all on April 1st, spread the loads out throughout the month, or deliver them all on April 30th. As long as all bushels are delivered within the time frame, you’ve fulfilled our contractual duty.
What happens if I can’t get it all delivered within the contracted date range?
Delivering within the date range you have contracted for is important, just like arriving during happy hour is important. What the grain buyer decides to do is up to their discretion. ALWAYS give them a call as soon as you can if it looks like you may have difficulty completing delivery within the contracted date range. In some cases, the buyer may charge a fee for late delivery and in other cases, the buyer may allow an extension past the last day of delivery on the contract.
Next up in the series will be…What is the Futures Price & Futures Month? Before the next post, be sure to follow/like my page on Instagram or Facebook for all the latest updates!