Fixed Price Contract for Deferred Delivery. This contract allows producers to establish a price for later delivery. A fixed price contract, also known as a cash forward contract, may allow you to schedule deliveries at times of the year that better fit with labor, grain quality, and logistics. Having an adequate amount of crop insurance allows you to comfortably contract the insured portion of your crop. These contracts often work well when crops are large, when storage is tight, or when the market price reaches the objective in your marketing plan.
Basis is the difference between the local cash price and a futures contract price.
Basis is typically more stable and predictable than either the underlying futures contract or the local cash price. However, basis does change in response to local supply and demand factors. A basis contract allows you to fix the basis, but allows the final cash selling price to be determined at a later date by subtracting the fixed basis from the futures price. MPCI or revenue insurance can give you the confidence to enter into basis contracts without the concern of not having a crop to deliver. Deferred of Delayed Price Contract.