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Redpower410280
Frequent Contributor

Taking delivery at the board

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I was wondering how taking delivery at the board works. My thought is if I were an end user somewhat close to a delivery point it would make sense to take delivery. If I were paying .80 to $1.00 over the board I should just get my corn at the board. I know that it sounds simple but how does it really work.

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OK_Grains
Contributor

Re: Taking delivery at the board

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Its not that simple Red,


By holding spot futures (ie July) you are not able to decide where your corn is delivered as it is a FOB river contract - this is up to the short who is going to deliver to you. You will most likely get it in a location where the basis is relatively low to the high basis areas. THe US corn contract is ultimately a river barge delivery, so your only options are for downstream - mostly the CIF gulf export market. Right now the export market is weak in the nearby in contrary to the interior basis which is firm...hence the weakness in nearby board spreads ( CN/CU has collapsed from +86 to +2 )

MInd you at a flat board with today's estimated carryout, the July makes sense for a large scale commercial to stop to ensure a backstop to their ability to source and secure old crop corn over the next 3 months.

Of course there is a lot more specifics to the delivery process than this, but thats the bare bones response.

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OK_Grains
Contributor

Re: Taking delivery at the board

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Its not that simple Red,


By holding spot futures (ie July) you are not able to decide where your corn is delivered as it is a FOB river contract - this is up to the short who is going to deliver to you. You will most likely get it in a location where the basis is relatively low to the high basis areas. THe US corn contract is ultimately a river barge delivery, so your only options are for downstream - mostly the CIF gulf export market. Right now the export market is weak in the nearby in contrary to the interior basis which is firm...hence the weakness in nearby board spreads ( CN/CU has collapsed from +86 to +2 )

MInd you at a flat board with today's estimated carryout, the July makes sense for a large scale commercial to stop to ensure a backstop to their ability to source and secure old crop corn over the next 3 months.

Of course there is a lot more specifics to the delivery process than this, but thats the bare bones response.

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teaspoon73
Senior Contributor

Re: Taking delivery at the board

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        Redpower, go to CME group.com , second info line from the top is clearing catgory. Hit clearing then go to deliveries. From there you can get a personal contact to help you. OK is right its a crap shoot on the delivery point. You can also find out where the deliverable grain is located.  Our feedlot is going to take some deliveries in the oats market, the board is cheap and it is almost always delivered in Minneapolis. We can get it as a backhaul so it works good . Feed is going to be very scarce out here and this is cheap compared to corn. Get to a personal contact and start asking questions

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