MPC Contract
Nov 20, 2024
As harvest is finishing in our area, many of our producers have found themselves wondering how to manage extra in-store bushels. This is a great problem to have, and several factors must be considered when developing a selling strategy. These factors include the rising costs of interest, storage, and potential market volatility.
Entering an MPC contract is a popular strategy that helps our producers manage their risk. This allows you to price your grain, stop storage, and get paid to stop any interest at the bank while retaining the upside in the market for a period. The MPC contract gives you a “middle ground,” so you have a worst-case scenario cash price but still retain some ownership of your grain in case of a higher market price in the future. When considering the cost of ownership to store grain and the market exposure you subject yourself to, the MPC contract is a great way to manage risk and maximize profitability.
Article provided by Todd Schultz, Grain Marketing Manager
Entering an MPC contract is a popular strategy that helps our producers manage their risk. This allows you to price your grain, stop storage, and get paid to stop any interest at the bank while retaining the upside in the market for a period. The MPC contract gives you a “middle ground,” so you have a worst-case scenario cash price but still retain some ownership of your grain in case of a higher market price in the future. When considering the cost of ownership to store grain and the market exposure you subject yourself to, the MPC contract is a great way to manage risk and maximize profitability.
Article provided by Todd Schultz, Grain Marketing Manager