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Rolling Contracts Education Please
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FlatlandAgII
Posted 2/20/2021 09:26 (#8846352 - in reply to #8846312)
Subject: RE: Rolling Contracts Education Please


I will assume that you are talking about a contract between you and the Elevator

First off if your contract is a flat price contract ( both the futures and basis is set), generally speaking none of the elevators I deal with will let you roll it or at least give you any gain to roll it.

if you have a HTA or a Basis contract then you can roll within the crop year but not across crop years.

HTA Roll - when rolling a HTA one looks at basis appreciation and carry so If you were to start with a dec 2021 sell at $4.75 and no basis set when harvest time comes and the March is trading 15 cents higher than Dec. you can move your $4.75 board price to March and you "new board price will be $4.90 but you will have to store the corn until they allow March delivery. then if you have a -.50 basis at Harvest time but normally have a -.30 basis in March you have taken your $4.25 price for delivery at harvest and made it a $4.60 delivery price for March.

as to how it works financially, cost of interest and storage matter if you have your own bins many figure that they need .02 to .04 per month to pay for bins a couple more for dumping grain into bin in fall vs just dumping at elevator and then you have interest cost on top of that.

Generally speaking if I do not need the money at Harvest i will look for something around .08 per month to roll HTA and then on top of that .04 in basis improvement on corn. fees charged by the elevator to roll should not be over .02 a roll.

not sure if tha was what you were looking for or not.

Edited by FlatlandAgII 2/20/2021 09:27
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