What is the Focal Point contract?
- Focal Point is an add-on to an existing Cargill grain contract where you experience penny for penny price participation up or down for the duration of your Focal Point contract.
- Focal Point adjustments are reflected in your contract’s final settlement.
- You are able to re-establish your price on the existing Cargill grain contract in up to three increments, not to exceed the volume of the existing grain contract.
- The market cost to enter a Focal Point contract is called the Focal Point Factor.
Why should I use Focal Point?
- If you understand your market bias and are looking for a hands-on approach to grain marketing.
- You should consider opening a Focal Point contract when you feel there is upside potential in the market.
- As your trusted partner, we’ll help you manage downside risk by establishing a trailing stop.
What else do I need to know about Focal Point?
- When you enter into a Focal Point contract, your grain settlement will be split into two payments. The reason for the split is the downside risk of creating a new position in the market.
- Once you have delivered your grain, you will receive a payment for 85% of the deferred delivery contract value; the balance and adjustment will be paid once the Focal Point net adjustment amount has been determined and all grain has been delivered. A Focal Point contract may extend past grain delivery, which will delay the second payment until the Focal Point net adjustment amount has been determined.
- It is important to understand you are taking on limited price risk if the market goes down.
- You can track Focal Point on CargillAg.ca
If you’re interested in learning more about a Focal Point Grain Marketing Contract download an info sheet here or contact your Cargill Representative.