For corporations, no capital loss is deductible unless matched by capital gains. Elevator contracts typically do not separate these price components, but tax issues can still be critical. This risk is especially important for credit-sale contracts, in which the title to the grain has been transferred to the buyer but payment has not yet been made. In Texas and many other states, credit-sale contracts do not have the same financial safeguards available for storage under warehouse receipts. This risk also may be a consideration with other types of contracts.
Some contracts require several stages of decision making beyond the initial contract signature.
With these contracts, there is risk that market action will move your net return to an unacceptable level before you realize what is happening and can take corrective action. Also suppose that you are concerned that the basis may weaken, but would like to participate in higher prices. Alternatives for managing these risks include using a basis contract, selling the grain and buying futures contracts, or selling the grain and buying call options. Suppose that you expect both the level of prices and the basis to strengthen. In that case, you might want to consider storing the grain, or selling on a delayed price contract or minimum price contract.