buying out contracts

[bucket]

Hasn't happened to me yet but might on the flax.

What happens if you grow a 5 cwad but prepriced for a 2 cwad. To buy it out to access a better market or grade.

Considering durum has skyrocketed on the better grades what is the penalty.

Conversely what the procedure for a grain company to buy your contract if the price has dropped. Wheat for instance.

And what happens if you don't get it combined?

Just wondering this morning.

[Klause]

If current price is higher you pay difference straight across grade.


If it is lower nothing or in the case of some the pay you.

[bucket]

Is it based on the spread the day you signed the contract or the day you have to buy it out???

[ajl]

You would pay based on buyout date.

[MBgrower]

Check your contract, you could be charged current market spread plus $15-20 per tonne 'administration' fee. Was told this is to limit farmers from speculating in a rising market. Love how these industry partners treat us.

[mbdog]

I've found it depends. Over last 3 years have paid the cash spread when went in to settle the issue, and at the same time was paid for a cash contract above the market. Was a 50-100$ admin fee the aster yellow year.
Grade spread for out of spec...never had issue because there was a plus/minus adjustment to base.
This year...20$ a tonne to buy out of basis contract regardless which is new. Expect off grade to be plus/minus cash price at time of settling issue, which I've discussed with buyer as soon as I know I have a problem, what my optins are and how much tie I have to settle. I've waited to settle some deferred contracts based on market sentiment.
This year, dunno if would do this if I was short and off-spec because of the risk associated with potentially bigger premiums over base in the cards. Working with producer/how much they can do to get you out depends whether quality/quantity is local issue or widespread. So be prepared for anything this year. They hold the cards.