Commodity Swaps for Producers

Like any other financial market, the farm commodities market can be volatile, which can be a challenge when it comes to managing cash flow. Our swap for producers allows you to lock in a portion of the sale price1 for your crops, reducing the impact on your cash flow. Contact your account manager

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Contact our Risk Management Solutions team at  514-394-4556 or at 1-844-394-4556 (toll-free) from 8 am to 5 pm (ET)

Sell your crops at a fixed price

Locking in prices with our swap for producers allows you to:

  • Secure your revenue by locking in a portion of the sale price when the market price is favourable.
  • Manage your cash flow more effectively
  • Focus on production

 

The swap for producers in four steps

Step 1

 

Decide on the transaction amount and time period.

Step 2

 

Negotiate a fixed price (swap price) with National Bank.2

Step 3

 

Sell your crop to a chosen buyer (consumer, grain dealer or processor) at the fixed sale price.3

Étape 4

 

At the end of the term, settle up any difference between the market price and the swap price.

Two possible scenarios

The market price is lower than the swap price

National Bank will pay you the difference between the swap price and the market price for the value of the contract.

The market price is higher than the swap price

You will pay National Bank the difference between the swap price and the market price for the amount included in the contract.

Features of National Bank's swap for producers

  • Price can be locked in up to 18 months in advance for up to 75% of your future harvest
  • Flexible reference dates (monthly or weekly average, set date, etc.)
  • Access to a range of agricultural price indices including corn, soy, wheat and pork
  • Generally, no upfront payments (margin calls) or refunds are required during the contract period
  • Has less impact on your cash flow than a futures contract
  • Currency risk is reduced with swaps available in both U.S. and Canadian dollars

 

Eligibility criteria

  • Produce at least 2,000 tonnes of grain per year
  • Have set up a credit facility and obtained the legal documents required by National Bank
  • Undergo a complete risk assessment by our specialists to establish the suitability of the product

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1 The market price is determined based on supply and demand. This price is independent of the actual transactions you carry out with clients and suppliers, and excludes the local cash basis.
2 The price negotiated with National Bank will be slightly different from the market price, to reflect the credit valuation adjustment, or CVA. This price difference is subject to change based on market conditions at the time of negotiation.
3 Price available at the time of sale: current market price (spot price) +/- local cash basis.
This content is for information purposes only and does not constitute an offer or solicitation to buy or sell any securities or financial products. Users must individually evaluate the benefits of a particular transaction, in consultation with their own professional advisors to determine whether the terms and risks of the transaction are appropriate for their specific needs.