While Minimum Price Contracts (MPCs) enable corn, wheat and soybean producers to lock in a minimum price for the production they commit to deliver, while still allowing them to benefit from higher prices that could occur subsequent to the sale, until now, the primary barrier to wider producer usage of MPCs has been the cost of the option that is passed on to the producer, much of which is the time value cost for longer expiration options. CME Group's Short-Dated New Crop (SDNC) options for structuring MPCs compared to standard options offer lower time value, and consequently, lower premiums.
For producers seeking protection for specific portions of the growing season, for example, through planting or pollination, SDNC options may provide a hedge during the life of the option as effective as one with standard options, but at a more attractive price.
As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.
Follow us for global economic and financial news.
CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.