When speaking of commodities, grains are one of the basic needs. Thus, it belongs to the list of basic needs of a person. However, not all countries have an abundance of it. It is expected that grains can be of a high price compared to countries with a lack of grain supply.
If you do business with grains, yet live in a country that lacks them, you need to contact reliable persons for the supply. Grainwise provides solutions about grain trade with their grain trade transactional brokers.
Who are the grain brokers?
A grain broker is a person who acts as the intermediary between the buyer and seller. Grain is traded around the world, being a commodity, it is both a food staple and a measure of wealth. A grain broker can also be considered an agricultural broker in the field of grains. It is a person who deals mainly with future contacts. The contract outlines the following:
- Quantity
- Future delivery time
- Delivery location
All these are arranged according to the price set after the agreement is made. Some brokers work for the execution of buying and selling orders.
The grain basis contract
The “basis contracts” have a difference between the futures price and local cash price. The “basis contacts” are established after the contract is signed. Grain processors or elevators pay a portion of the grain value at the time it is delivered to the purchaser. Using basis contracts helps in marketing grain. It provides more flexibility to how the farmers market and profit from it.
Using grain basis contracts helps with recent marketing meetings and grain management. Typically, when there is a cash price, which is thought of as one price, the basis contracts break the price into two components:
- Futures price
- Basis
Instead of maximizing one component, farmers try to maximize both. It gives the farmers more opportunity and flexibility to get a better cash return rather than capturing the highest cash price.
How grains are traded?
When speaking of grain’s future market, it can be done through several exchanges all around the world. Most of the trading action centers with a handful of consumed grains, such as:
- Wheat
- Corn
- Soybeans
- Rice
- Oats
All these are considered grains and are traded in the market, which grain trade transactional brokers can be of big help.
Grain marketing has become a big talk in the market ever since. It is a simplified way with a series of decisions, from price discovery and strategy through grain sales and execution. A grain trade broker can help you understand grain trading.
