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| Specifically Cargill's Focal Point Contracts. So basically the Focal Point Contract allows the elevator to take physical control of the commodity, but final price has not been determined. Producer receives 70% of a set futures price minus basis. This futures price is the "focal point" of which the final price is determined. So if the futures drop $0.50 from where the futures price was set, then that's what you lose if you price out. If it goes the other way, that's is what you gain. So question is, are these type contracts eligible for the "January 15th" cutoff? You definitely have "price risk", but you do not have the physical commodity. | |
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CFAP and Grain Contracts
