A Basis contract secures the basis level and delivery period without specifying the futures level, allowing you to lock in a basis level that you find attractive even if you’re not ready to set the futures. The final cash price will be equal to the basis combined with the futures once you set them.
Basis contracts are a good choice when you think that basis levels could widen but you feel futures could improve. Basis contracts also guarantee you a delivery period to dump your grain when you want to secure space. Locking in basis may also be preferable to storage charges. You may also be able to get a payment advance against your basis contract before you set the final price.
When you’re ready to set the futures of your basis contract, in addition to the market price, you can also use one of Cargill’s other marketing alternatives to determine the futures.