PaceSetter Xtra grain contract

Cargill PaceSetter Xtra grain contract guarantees a minimum price with the potential of an extra payment if futures rally during the chosen time period.

Full Transcript

NARRATOR: Hi, I’m PaceSetter Xtra.

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SUPERIMPOSED TEXT: Hello PaceSetter Xtra.

NARRATOR: Before I get started on who I am and what I do, let’s learn a bit more about you. What’s on your mind?

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SUPERIMPOSED TEXT: I’ve got bills to pay. I need to move my grain, even when the price doesn’t meet my target. I don’t like selling too soon. At times I feel like a price-taker.

NARRATOR: Don’t worry, I can help. Consider me a solution that helps you meet your movement schedule, provides cash-flow when you need it and allows you to earn more if the market rises.

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SUPERIMPOSED TEXT: What do you mean?

NARRATOR: It starts with a deferred delivery or flat price contract. I give you the flexibility to manage grain delivery and pricing decisions separately so you’re not forced to be a price taker, but you can still deliver when you want to.

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NARRATOR: Okay, let me walk you through the process. First, you decide how much grain you want to sell, and tell me when and where you want to deliver it. This is when the minimum price you will receive for your grain is set. This minimum price is also used to determine my fee.

Next, you work with your Cargill representative to choose a futures averaging period and a price below which your futures average will never drop. If the average daily closing price over the course of your chosen period is higher than this minimum, you receive a top-up payment for your grain. If it is below the minimum, you will receive no extra payment.

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SUPERIMPOSED TEXT: Do I have to watch the market and price out at a certain time?

NARRATOR: No. Throughout that averaging period, I monitor the market for you. I calculate the average daily closing price by using either your minimum price or the daily closing futures price – whichever’s higher. That means that the average will never go below your minimum price.

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SUPERIMPOSED TEXT: When will I know the outcome?

NARRATOR: At the end of my averaging period. And there are two possible scenarios:

One: My average price is higher than your minimum price. In that case, you get an extra pay-out.

Two: My average price is equal to your minimum price. If that’s the case, you don’t get an additional payment. When you deliver your grain, you’ll get paid in full – minus your basis and my fee.

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SUPERIMPOSED TEXT: What’s the catch?

NARRATOR: Well, if the market doesn’t trade above your minimum price during the averaging period, you don’t get the additional payment. That’s why it’s important to ensure that the original price you receive for your grain meets your cash flow needs.

Also, while I protect you against the market lows, you won’t be able to capture the market high either.

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SUPERIMPOSED TEXT: What happens if the market spikes?

NARRATOR: If the market spikes, I’ve got an option that allows you to lock in that price for the remainder of the averaging period. If you like watching the market, you might like this feature, if you don’t, you can also set it and forget it.

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SUPERIMPOSED TEXT: So what you’re saying is…?

NARRATOR: What I’m saying is… you can use me to set a delivery date that works for you, lock in a minimum price that you’re comfortable with, get cash flow when you need it and receive more money for your grain if futures prices increase. In order words, I can help you pay those bills, free up some bin space, remain in control – and you don’t have to worry about selling too soon.

I’m PaceSetter Xtra, part of Cargill’s grain contracting solutions.