Compound feed suppliers are looking for a way to price feed deliveries over time. A compound feed company can quote prices for this itself, by purchasing the feed ingredients in advance and passing this price on to the customer.
Another way is to base such a forward price on the prices of forward contracts. Then the feed price is based on the prices of, for example, soybeans and grain maize on the Cbot in Chicago and that of wheat on the Matif in Paris. For example, an objective price for the feed is determined, based on the many insights of all parties that trade in those markets.
Another advantage of this method is that the quote can be calculated several times a day or even continuously. This is possible if the parameters for weighing the feed ingredients and the solid component for premix and minerals have been determined. With every change in the price of soybeans, corn or wheat, a quotation can be calculated and offered to the buyers.
In this way, long-term agreements can be made between the supplier and the buyer of the feed. The price associated with these (long-term) deliveries is determined by the quoted quote and the moment the customer clicks that price. If desired, the feed supplier can easily manage its risk by taking a position in the physical market or in the market for futures contracts for soybeans, maize and wheat.
Are you curious how we as DCA approach and guide the above? Or would you like to spar with us to solve similar challenges within your company? Then call 06 46 26 58 74 or email R.vantRiet@DCA.nl
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