Pilgrim's Pride offers several contract options to assist in the marketing of grain. Below we have listed the available types, along with a description of the contract details. Call Christian at (970) 506-7615 with any questions, or to set up a contract with Pilgrim's Pride.

Cash Contracts
This type of contract allows the producer to lock in the full cash price for their grain today for either immediate delivery or delivery for a date later on

How it works:

Grower agrees to deliver a specific quantity and quality of grain for a determined delivery period. Grower is paid current CBOT price plus or minus the local basis, or the current cash price

Cash Contract Advantages:

• Allows grower to lock in today’s price for their grain
• If a producer likes the price of a later month better they can lock that in and deliver later
• Once the price is locked in there is no need to worry about fluctuations in price, the price is locked in and the grain is considered sold
• Producer knows what they will get paid when their grain is brought in (plus/minus any premiums or discounts)

Cash Contract Disadvantages:

• Costlier to buy out of, relative to a few other contract types, if unable to deliver grain
• Grower is unable to capture any potential gains in futures or basis prices

Basis Contracts
These contracts allow the producer to lock in their basis on their contracts and lock in futures at a later date

How it works:

Producer agrees to deliver a specific quantity and quality of grain for a determined delivery period. The basis is locked in on the contract at this time. The final price of the contract is determined at a future date, by locking in the futures price and adding/subtracting the basis value on the producer’s contract
Basis Contract Advantages:

• Allows producer to sell their grain while locking in part of the price, waiting for higher futures levels to lock in the last portion of the price on the contract

Basis Contract Disadvantages:

• Futures prices are not guaranteed to rise and could instead fall. Market risk is the greatest disadvantage

Delayed Price (DP) Contracts
These contracts allow the producer to haul their grain today but price it by a date established by Pilgrim’s Pride

How does it work?

Let’s say the producer delivers their grain to Pilgrim’s Pride but does not like the cash price at the time. The DP contract allows the producer to move grain and wait to lock in a price until the contract reaches its expiration date or prices become more attractive and the producer sells. Pilgrim’s then collects a small fee based on the amount of time that has passed between delivery and pricing

DP Contract Advantages:

• Pilgrim’s Pride assumes the risks and costs associated with storing grain and keeping it in condition
• Producer can wait to sell grain until price becomes more attractive
• Producer can haul now and price later

DP Contract Disadvantages:

• DP Contracts usually have storage charges, which are set by Pilgrim’s Pride and based on space availability, feed production needs and market conditions
• Price of grain may be highest when grain was hauled, there is no price protection should the markets take prices lower. This contract is subject to the risks associated with the CBOT market, as well as local basis price swings