Grain contracts, in plain language
Every grain company has its own names for its contracts, but almost all of them are built from the same few pieces. Learn the pieces once and you can read any company's contract.
Futures
The price on a commodity exchange that the whole world watches. Canola trades on ICE Futures in Canadian dollars per tonne. Wheat, corn and soybeans trade on US exchanges in US dollars per bushel. Futures move every minute the market is open.
Basis
The difference between futures and what an elevator will pay you. It covers freight to port, handling, the company's margin and local supply and demand. It is usually negative on the Prairies. Basis is set by the buyer and differs elevator to elevator.
Cash price
Cash price = futures + basis. When a contract "locks" something, it is locking one or both of these parts. Whatever is not locked can still move — up or down — until you price it.
The contracts
Tap a contract to open it. Names vary by company — see what the companies call them below.
Spot (cash) saleSell today, deliver now, get today's price.
You take today's posted price for grain you deliver right away (or within a few days). Futures and basis are both fixed the moment you agree.
- Today's price is above your break-even and you need cash
- You need bin space
- Basis is unusually strong right now
- You get no benefit if prices rise later
- Spot prices are often weakest at harvest, when everyone is selling
Deferred delivery (flat-price) contractLock the full price now, deliver later.
You agree today on a fixed price, a quantity, a grade and a delivery window in the future. Both futures and basis are locked. You haul in the agreed window and get the agreed price, whatever the market does in between.
- The price covers your costs with a margin you're happy with
- You want certainty for cash-flow planning or your lender
- Deferred prices are higher than spot (a "carry")
- You must deliver the amount and grade agreed, even in a short crop
- If you can't deliver, you may have to buy out the contract at the difference to today's price plus fees
- Don't contract more than you're confident you'll grow
Basis contractLock the basis now; set the futures price later.
You lock in the basis (the local part of the price) but leave futures open. Before a deadline, you choose when to set ("price") the futures part. Your final price is the futures price on the day you price it, plus the basis you locked.
- Basis is good now but you think futures will rise
- You want to book delivery space without setting the whole price
- You still carry the risk of futures falling
- There is a deadline — if you don't price it, the buyer will price it on that date
Futures-only contractLock the futures price now; set the basis later.
The mirror image of a basis contract. You lock the futures part and leave the basis open, then set the basis before a deadline. Some companies call this a "fixed futures" contract; in the US it's often called "hedge-to-arrive".
- Futures are high but local basis looks poor
- You expect basis to improve (often after harvest pressure eases)
- Basis can get worse, not better
- Basis deadline — know what happens if you don't set it
Target (offer) contractName your price; it sells automatically if the market gets there.
You tell the buyer the price you want for a set amount. If the market reaches your target before the offer expires, the sale is made automatically — even overnight, when the futures market may hit your number while you're asleep. If it never gets there, nothing is sold.
- You know your break-even and the margin you want
- You can't watch the market all day
- Once it fills, it's a firm contract to deliver
- Check whether you can cancel it before it fills, and when it expires
- Set targets you can actually deliver against
Minimum-price (price floor) contractGuarantee a floor, keep some of the upside, pay a fee.
You lock a minimum price but can still gain if prices rise. The buyer uses options on the futures market to do this, and the cost of that option comes off your price as a fee or premium. Think of it like insurance on your price.
- You want protection but don't want to give up a rally
- Prices are volatile
- The premium is paid whether or not prices fall
- Read exactly how the upside is calculated and when it's settled
Pool contractYour grain is sold over time with other farmers' grain; you get the average.
You commit grain to a pool. The company (or a pool manager) sells the pool's grain over the season, and every farmer in it is paid the average result, usually with an initial payment and later adjustments. You hand the timing decisions to the pool manager.
- You'd rather not time the market yourself
- You want to avoid selling everything at a seasonal low
- You won't get the season's best price — you get the average
- Final payment can come months later
- Check the management fees and how the pool's performance is reported
Production (acreage-based) contractYou agree to sell what a set number of acres produces.
Instead of a fixed number of tonnes, you contract the production from specified acres, often for specialty or identity-preserved crops grown to a buyer's specifications. Many include an "Act of God" clause that limits what you owe if weather cuts the crop.
- You're growing a specialty crop with a limited market
- You want delivery protection in a short crop
- Read exactly what the Act of God clause covers (drought? hail? frost? quality?)
- Grade and quality specs can be strict
Deferred paymentDeliver now, get paid in a later tax year.
Not a pricing contract but a payment option: you deliver and price the grain now and agree to be paid on a later date, often after January 1, which can move the income into the next tax year. Whether that helps you depends on your tax situation.
- Your accountant advises moving income into next year
- You are an unsecured creditor of the buyer until you're paid — check what payment protection applies
- Talk to your accountant first
What the companies call them
Each company brands its contracts differently and changes its line-up from time to time. The names below come from the companies' own published material; always read the current terms on the company's site or with your grain buyer before you sign.
| Company | Contract name | What it is, in plain language |
|---|---|---|
| Richardson Pioneer | Basis Selector | A basis contract: lock the basis, keep the chance to gain if futures rise. |
| Price Selector | A deferred-delivery contract aimed at capturing a premium for delivery at a set future date. | |
| Market Manager | A target contract: Richardson buys a set amount if the market hits your price in the contract period. You can cancel before it fills; it expires if the target isn't reached. | |
| Viterra | Basis contract | Lock basis, price futures later. Available online through myViterra. |
| Flat-price contract | A deferred-delivery contract with the whole price locked. | |
| Fixed futures contract | A futures-only contract: lock futures, set basis later. | |
| Cargill, ADM, G3, P&H, Louis Dreyfus, others | Being added. Each company's grain marketing team can walk you through their current contracts. | |
Sources: richardsonpioneer.ca (Grain Marketing), viterra.ca (online contracting news release). Viterra has been part of Bunge since July 2025.
Before you sign any contract
- Quantity and tolerance: how many tonnes, and how much over or under is allowed?
- Grade and specs: what grade, protein, moisture and dockage? What are the discounts if you miss?
- Delivery window: what dates, and what if the elevator can't take it on time?
- Deductions: freight, elevation, cleaning, levies and check-offs.
- If you can't deliver: is there a buyout or cancellation fee? How is it calculated?
- Deadlines: for open contracts, when must you price, and what happens if you don't?
- Payment: when are you paid, and what protection applies? Check that the buyer is licensed by the Canadian Grain Commission.
Words you'll hear
- Carry
- When deferred prices are higher than today's. The market is paying you to store.
- Inverse
- When today's price is higher than later prices. The market wants the grain now.
- Spread
- The price difference between two futures months, two crops or two locations.
- Dockage
- Material that can be cleaned out of the grain (weed seeds, chaff). It's deducted from paid weight.
- Act of God clause
- A clause that limits what you owe if weather or other events beyond your control reduce your crop.
- Price later / priced
- "Priced" means the full cash price is set. Anything still "open" can still change.