At Ludlow Cooperative Elevator Company we are in business to serve you. Our goal is to provide the grain handling and marketing alternatives necessary to maximize your profit potential.

This booklet is designed to better acquaint you with the marketing alternatives we offer, as well as our grain storage and conditioning services. Please remember that the fees shown are variable due to market conditions and can change without notice. It is advisable to call and confirm current charges.

Ludlow Co-op Elevator Company is a state licensed grain dealer and warehouse. This licensing assures you that our facility meets applicable state and federal regulations, and undergoes at state examinations at least annually, and annual independent audits by a CPA. There review our accounting practices, inventory insurance coverage, and our grain inventory quantity and quality. The integrity of stored grain is covered under the Illinois Grain Insurance fund.

If you have any questions please feel free to call or stop by, we'll do our best to help.

Farming has seen a huge jump in productivity since the Illinois prairies were opened. The size and speed of today's harvests can dwarf those of just a few years ago. Since 1904 Ludlow Co-op elevator Company has made a considerable investment in facilities, transportation, and information services. We anticipate continued upgrades to meet the demands of today's market.

With increased price volatility and market-oriented farm programs, marketing your grain becomes of even greater importance in maximizing your profitability. The available marketing alternatives, and the complexity of some of these alternatives, has also increased.

We strive to stay current on market conditions and opportunities here at Ludlow Co-op Elevator Company.

A brief description of several contract alternatives are listed on the following pages. For further information please contact us so that we can review the contracts with you personally.

Current storage rates for harvest delivery are a 10 cent per bushel (11 cent on soybean) delivery or “in charge” plus 1/10 cent per bushel per day storage charge through August 31 st of the next year. Old crop grain left in storage after August 31 is subject to a new minimum storage charge.

CHARGES ARE SUBJECT TO CHANGE. CHECK CURRENT CHARGES PRIOR TO DELIVERY.
GRAIN DELIVERED WITHOUT PRIOR DISPOSITION, AND NOT SOLD BY OUR CUTOFF WILL BE STORED, IF STORAGE IS AVAILABLE.

“Spot” grain is a cash sale at the nearby market price. The market price used is our closing bid, for the current delivery period, on the day the grain disposition is made.

With this alternative the price is not established ahead of time, therefore you are at risk of price fluctuation between the time of delivery and disposition. For example, you bring in new crop corn on a Tuesday in harvest and the nearby bid is $2.10. The corn is placed “on hold” awaiting disposition. On Friday you finish the field and sell out the corn that came in that week. The nearby price has gone down to $2.00 so the corn will be priced out at $2.00.

A Forward Contract is used to lock in a price for grain at a future date. The price, quantity, and delivery period are established in the contract. Any variance in these terms must be agreed upon in advance by the buyer and the seller.

WE MAY BE ABLE TO CANCEL A CONTRACT DUE TO CATASTROPHIC PRODUCTION FAILURE, BUT FORWARD CONTRACTS ARE WRITTEN WITH THE INTENTION OF TAKING DELIVERY AND CANCELLATION IS NOT ENCOURAGED. CANCELLATION COSTS AND FEES ARE MARKET DRIVEN AND CAN CHANGE WITHOUT NOTICE. CANCELLATIONS MUST BE PRE-ARRANGED.

A basis contract allows the seller to maintain SOME pricing flexibility. In a typical cash sale contract the cash price is determined by taking the Chicago Board of Trade (CBOT) futures and adding/subtracting the basis level to it. In a basis contract the quantity, delivery period, and the basis component of the price are established at the time the contract is written. The CBOT price is left open to be established at a later date. At that later date the final price is established by adjusting the CBOT futures price by the previously established basis level.

The basis contract can be used to capture a historically attractive basis level, or to move grain while awaiting a CBOT rally. The futures option month that the contract is to be priced off of is established in the contract, as is the date by which the final price must be established. It MAY be possible to amend the contract to price off of a different CBOT futures contract month to provide you with more flexibility. If this is done, however, the basis level will be amended by the spread between the two contract months, plus a service charge to cover increased interest charges and the additional commission charges incurred by the elevator.

It is our policy NOT to roll basis contracts from one crop year into the next.

A HEDGE TO ARRIVE CONTRACT MAY SERVE THE SAME FUNCTION AS SELLING A FUTURES CONTRACT, BUT IT IS A CASH CONTRACT AND IS WRITTEN WITH FULL ANTICIPATION OF DELIVERY.

OUR POLICY REQUIRES PLACING THE UNDERLYING FUTURES CONTRACT IN THE SAME CROP YEAR AS DELIVERY. NO OLD-CROP / NEW-CROP SPREADS.

A Minimum Price Contract establishes a guaranteed base price to protect you against lower prices while still permitting participation in a rally. The delivery period, quantity, and minimum price are established in the contract. The upside participation is allowed through the purchase of a futures option by Ludlow Co-op. The minimum price is determined by taking the delivery period cash price and subtracting the option premium and a service charge.

We will work with you to determine the call option month and strike price that best suits your marketing goals.

In any minimum price contract the title passes to the buyer upon delivery. Because of this the grain delivered against a MPC is no longer eligible for a CCC loan.

Depending on market conditions a MPC might be less than storage or DP charges

A Delayed Price Contract, (also variously known as No Price Established, Price Later, or Deferred Price Contract), allows you to move grain without establishing any price. The charges for a Delayed Price (DP) Contract are highly variable, changing with current market conditions. Once the DP contract is written, however, those charges are fixed and will not change for that particular contract.

It is important to note that in a DP Contract the title to the grain passes to the buyer upon delivery. You are therefore unable to use DP grain as security collateral for loans. Under current USDA marketing loan provisions you can still receive any applicable Loan Deficiency Payment as of the date of delivery if the prerequisite paperwork is done in advance at the FSA office.

A supplemental, state-mandated, form must be signed and returned in addition to our regular contract confirmation.

The delivery period, service charge, and date by which pricing must be fixed are established in the initial contract.

Service charges are determined by market conditions. They can vary widely, from no charge to levels higher than commercial storage.

Ludlow Co-op Elevator Grain Company will continue to analyze other marketing alternatives. In addition, we are a branch office of FCC Futures Inc. to enable you to directly execute futures or options based hedging program locally. Our desire is to increase your marketing flexibility through a variety of marketing tools. There are advantages and disadvantages to each. Like other tools there is a time and a place for each and no one works best in all circumstances. Which alternative you choose should depend on current market conditions, your expectations, your comfort level with the particular marketing alternative in question, and the amount of price risk you are able and comfortable in taking.

We will be more than happy to make all the time necessary to talk to you about market conditions, and these contracts, and how they fit into your needs.

WE APPRECIATE YOUR BUISNESS, SERVING OUR CUSTOMERS IS WHY WE ARE HERE.