Protein premiums are paid for HRW and HRS wheat over and above the contract price. Grade No. 3 and feed grade discounts are listed in the contract. It is similar to the cash price option, except that a contract is signed for delivery at some date in the future, rather than immediately. All other features are identical to the cash pricing option. This option allows producers to lock in a price, but still have market gain potential, in the same manner that producers of non-Board grains can utilize put options.
Producers can choose a minimum price with a strike price.
The strike price allows producers extended time for putting a final price on their contract while at the same time guaranteeing a minimum fixed return. The board will choose the strike price. At harvest, producers will have a minimum price available to them. The strike price will be determined later and at delivery, the producer will receive the initial payment. All the rules of cash pricing apply equally to minimum pricing.