Producers Commodities LLC
We offer commodity brokerage hedging and trading activity through Producers Commodities LLC, part of the family of services provided by Producers Livestock Marketing Association. Producers Commodities has offered these services for nearly 40 years.
Located in our Sioux City office, Producers Commodities is an Independent Introducing Broker, clearing their activities through INTL FC Stone Financial, Inc. Our expertise is in agricultural hedging and trading, focusing primarily on live cattle, feeder cattle, lean hogs, corn & soybeans.
Producers Livestock Marketing Association - Hedge Contract
In addition to their wholly owned subsidiary, Producers Commodities LLC, PLMA also offers cattle feeders and hog producers a unique Hedge Contract. This is a marketing tool takes the complexity out of the futures and options market and combines many pricing decisions into an easy to use program. This contract is a specific forward pricing agreement that is formulated upon the CME Live Cattle, Feeder Cattle and Lean Hog futures and/or option pricing, which can only be used by PLMA customers on cattle or hogs that will actually be delivered under a cash marketing arrangement. Unlike using a traditional commodities futures broker where initial and subsequent margin calls must be posted, PLMA’s Hedge Contract does not require any initial or subsequent margin calls. There are 6 easy steps to participate in this program:
1. Make contact with a PLMA beef or pork agent or loan officer and agree to allow them to represent you when marketing your beef cattle, Holsteins or butcher hogs.
2. With the assistance of our marketing agents, loan officers and our risk management staff, the customer has final say in all hedging decisions. PLMA then hedges the cattle/hogs in its’ own account with futures or options and pays all trading fees, initial margin requirements and margin calls.
3. A one-page contract is mailed for your signature along with a lender acknowledgement for your lender to sign.
4. Pay a small, one-time, up-front service fee to cover the costs of the contract.
5. At market time, the cattle/hogs are sold on a live, dressed, grade & yield/carcass merit basis and the coop’s normal marketing fees are charged to your account. The futures or option position is then liquidated at that time, and must be treated as a “true hedge”.
6. At settlement, we add the futures or option profits to the cash sale or deduct the losses. You stand the basis risk.
You can contact any one of our marketing agents or loan officers for more information, or call 1-800-831-5936 at the Sioux City office to speak with one of these experienced risk management consultants:
John Nelson – Senior Vice President
Cattle Basis Spreadsheet (PDF)
Lean Hog Basis Spreadsheet (PDF)
Cattle Contract Sample (PDF)
Hog Contract Sample (PDF)
Lender Acknowledgement (PDF)
Visit Producers Commodities LLC website at www.producerscommodities.com
4809 S. 114th Street
Omaha, Nebraska 68137