Basis and Hedge-To-Arrive Contracts: What's The Difference?

By Lindy McMillen

Your Garden City Co-op offers a variety of contracts to suit your grain marketing needs. Two of these include basis contracts and hedge-to-arrive (HTA) contracts. These contracts break down the cash price of grain into its individual components: the futures price and the basis.

Basis contracts are a forward contract that allows a producer to lock in the basis on a future grain delivery but leaves the futures level open to be priced later. Basis contracts can make sense when the basis is favorable, but the farmer believes that futures may go higher.

On the flip side, an HTA contract is a forward contract that allows a producer to lock in a futures price on a future grain delivery but leaves the basis open to be set later. An HTA is an option that makes sense when futures are high, but the producer believes that basis will improve.

Reach out to your grain team member to learn more about these contracts and to discuss what would be a good fit for your operation.