Purchase Offer Contracts

Overview

To help track producer grain offers for future delivery, a Purchase Offer Contract transaction has been added to the Grain 5.0 module that enables users to document their producer offers to sell grain. Users will be able to enter and print purchase offer contracts with dispositions of priced, futures fixed, or hedged to arrive. A new report and a monitoring utility have been added to help monitor and track offer contracts to see how close they are to reaching the offer price. Offer contracts can easily be converted into actual purchase contracts after the offer price has been reached, with minimal additional data entry required.

Setup

Setting Up Purchase Offer Contracts

To effectively use purchase offer contracts, a minimal amount of setup needs to be established at Grain/Setup/Futures Month / Pricing by entering rows for the futures months that will be used for the offer contracts as well as the monitoring utility described later in this document.

Columns that are mandatory in the Setup / Futures Months / Pricing window are Commodity, Futures Month, and Fut Month End Date.

NOTE: Information established in the Setup / Futures Months / Pricing window can be pulled into both purchase offers and purchase contracts.

Creating a Purchase Offer Contract

 Entering purchase offer contracts (Grain/Operations/Purchase Offer Contract) is very similar to entering the purchase contract. 

Components of an Offer Contract

  1. Contract Number can default if auto numbering is turned on.  If auto numbering is turned-off, the contract number must be manually entered.

  2. The Customer ID is required.

  3. The Commodity is required.

  4. Date Established defaults with the computer date.

  5. The Expire Date is not required.  If entered, it can be used as a filter in the Futures Offer Report and the Monitor Purchase Offer Contracts Utility.

  6. Contract Type defaults in as PricedHedged-to-Arrive or Futures Fixed are also available options.

  7. Contract Status defaults in as Open but New Crop is also an available option.

  8. Offer Status defaults in as Open.  Will automatically change to Filled if user clicks the Convert to a Purchase Contract button. User can edit existing offer contracts and change to Expired or Canceled when applicable.

  9. Contract Quantity is required.

  10. Futures OP (futures offer price) is required only for contract types HTA or Futures Fixed.

  11. Cash OP (cash offer price) is required only on Priced contracts.

  12. Futures Month may be selected from the dropdown box that was set up earlier.  The View Price Grid button may be used to select a row from the Setup / Futures Months / Pricing grid. If a row is selected, the following data will be pulled into the contract: commodity, location, exchange, bid criteria, futures month, start delivery period date and end delivery period date.  If this data conflicts with information that may already have been entered manually on the contract by user, a message will indicate the data that is in conflict and user will be given an opportunity to cancel or continue.

  13. The Comments tab is available to add comments that pertain to the contract. An example would be the reason for canceling the offer contract.  Comments can also be selected from a list of previously saved comments.  If an offer contract is converted to a purchase contract, a cross reference comment will be automatically added to both the offer contract and the new purchase contract for audit trail purposes.

  14. The exchange and the bid criteria are only required if set up on the Setup / Futures Months / Pricing grid.  If none are set up on the Setup / Futures Months / Pricing grid, then the fields are optional.  Each may be used as a filter in the Purchase Offer Contract Report.

  15. Salesperson, Destination and Pricing Note are optional and can be used as filters for report purposes.

  16. Start Delivery and Complete Delivery Dates are required if used in the Setup / Futures Months/ Pricing window.  If they are in the window, then the dates on the offer contract have to fall between the dates in the Setup / Futures Months / Pricing rows.  If they are not in the Setup Futures Months / Pricing window, then they are optional but can be used as filters in the report and the monitor utility.

  17. Schedules for specific grade factors may be applied to the offer contracts.

Purchase Offer Contract Support

The report can be used to list and monitor the offer contracts.  The report lists the contracts in ascending order of offer price starting with cash offers first, then listing the futures offers.

To use the report as a monitor, use the Offer Price Range filter and enter a low and a high offer price.  For example if current cash bid based on previous market close is $7.25 and the daily market limit up is .30, then enter 7.25 for the low and 7.55 for the high.  The report will show all the offer contracts within that range, and the offers that could potentially hit within the range during the next trading session.  

The report can be filtered to show the priced and/or hedged-to-arrive and/or futures fixed offer contracts within the offer price range, or all offer contracts.

Monitor Purchase Offer Contracts Utility

The Monitor Purchase Offer Contracts Utility can be used to watch offer contracts and convert offer contracts into purchase contracts. 

The monitor utility displays the contracts that are available to be converted into purchase contracts.  The monitor utility has several filters to narrow the results.  One filter is Setup Price Tolerance, which is used to filter by the price on the offer.  The grid will show all offer contracts where the offer price is within the price tolerance of hitting the actual futures or cash price that is displayed in the Setup / Futures Months / Pricing grid.  The user sets the price tolerance per commodity.  If the Setup Price Tolerances option is left blank it will only bring the contracts in that are an exact match to the price in the Setup / Futures Months / Pricing grid.

The monitor utility can be used to cancel, fill, or expire offer contracts by changing the offer status and putting a check in the Update column.                            

Offer contracts can be converted into purchase contracts using the monitor utility by highlighting a row and using the Convert to Purchase Contract button to convert the offer into a purchase contract.

Converting Purchase Offer Contracts

Two methods are available to convert purchase offer contracts into purchase contracts. 

In Grain / Operations / Purchase Offer Contracts, editing an offer contract allows the offer to be converted directly into a new purchase contract.

In Grain / Utilities / Monitor Purchase Offer Contracts, convert the highlighted offer contract by clicking on the Convert to Purchase Contract button to add a new purchase contract using the offer contract information as the source.