Insights (Sponsored by StoneX) - 5

FCStone Merchant Services' Enhanced Origination Program
* All purchases are directed through FMS intermediation with basis bid agreed to by destination
* FMS is the contracting party that purchases from the grower on your behalf, you control level of involvement
with the grower
* Purchase from producers priced at negotiated basis price with simultaneous sale contract between FMS
and you at purchase basis + fees (this establishes new basis ownership level)
* Forward purchases (futures values) may be locked in up to 24 months in advance of delivery or anytime
coproducts are priced or market conditions are favorable to lock in price of feedstock
* Grower is able to " price " sales to FMS before planting through delivery to capture favorable market
opportunities
- Allows grower to manage the board price component of the price by utilizing a variety of pricing structures
- FMS can work with the elevator's commodity risk manager to provide feedback and pricing for various
pricing functionalities to offer to the customers.
* Full reporting is received around all farmer contracts, volumes, structures etc.
Hedge Program (rolling 12 mos)
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Price Protections
If teaming up with a service provider works from a
practical standpoint with inventory, it also offers a
range of financial benefits.
For one thing, processors can get forward procurement
and lock in costs, without having to enter
into a financial contact with a specific supplier.
In addition, using a service provider allows for off
balance sheet working capital. With FMS managing
the commodity price risk until just before the processor
needs the commodity, a processor would not
have to use as much capital to fund inventory and
hedge margin.
Ultimately, accounting is simplified. Cash con
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tracts are used instead of financial positions. This
approach also eliminates the need to employ hedge
accounting for those that do not qualify for mark to
market treatment.
While accounting is simplified, processors have
alternatives with a pricing suite that includes various
strategies to minimize upside market risk and/
or participate in falling prices.
Going back to the grain origination example, the
third party (FMS) is able to buy from producers on at
a negotiated basis price. Forward purchases of corn
feedstock can be locked in up to 24 months in advance
of delivery or any time that market conditions
are favorable to lock in feedstock prices.
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Insights (Sponsored by StoneX)

Table of Contents for the Digital Edition of Insights (Sponsored by StoneX)

Insights (Sponsored by StoneX) - 1
Insights (Sponsored by StoneX) - 2
Insights (Sponsored by StoneX) - 3
Insights (Sponsored by StoneX) - 4
Insights (Sponsored by StoneX) - 5
Insights (Sponsored by StoneX) - 6
Insights (Sponsored by StoneX) - 7
https://www.nxtbook.com/sosland/fcs/insights-sponsored-by-stonex-august-2021
https://www.nxtbook.com/sosland/fcs/insights-sponsored-by-stonex
https://www.nxtbook.com/sosland/fcs/2020_05_01
https://www.nxtbook.com/sosland/fcs/2019_12_01
https://www.nxtbook.com/sosland/fcs/2018_11_01
https://www.nxtbook.com/sosland/fcs/2018_10_01
https://www.nxtbook.com/sosland/fcs/2018_02_01
https://www.nxtbook.com/sosland/fcs/2016_08_01
https://www.nxtbook.com/sosland/fcs/2015_11_01
https://www.nxtbook.com/sosland/fcs/2015_06_01
https://www.nxtbook.com/sosland/fcs/2014_11_01
https://www.nxtbookmedia.com