FORWARD-CONTRACTING

A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. Land O’Lakes, Inc. can trade futures and options with the CME through a broker.  A Land O’Lakes member can place forward contracting orders with Land O’Lakes, Inc.

Log-on to MPOL to place a forward-contracting order today.

Process: 

1. Log-on to MPOL or create an account 
2. Complete participation agreement locate on the MPOL website under 'contracting' 

Order types:

DAY ONLY ORDERS
• Class III: Can contract full 200,000 pounds or less than full in 25,000-pound increments
• Cheese: Full contracts only in 20,000 pounds
• Monthly, quarterly or semi-annual
• 15 months forward
• Monthly offer price is previous day’s closing price
• Member will allow Land O’Lakes to sell down a maximum of $0.10/cwt.
• Orders will expire at the end of day unless accepted
• Transaction fee of $0.12/cwt.
• Settled on final milk check

OPEN ORDERS
• Available in class III, class IV and cheese
• Open orders are full contracts only
• Allows members the ability to set a “target price”
• Open orders remain open until filled, cancelled or expire on the 15th day of the delivery month
• Transaction fee of $0.12/cwt.

FLOOR/CEILING OPEN ORDERS
• Sell at market price and buy (ceiling) milk back at higher price
• Use this strategy if current market price is favorable and strong potential for higher prices
• Floor option: Use DRP since it is subsidized
• Include class III, class IV and cheese
• Available for floor only, floor and ceiling or ceiling only
• Orders will expire the 15th of the delivery month
• Administration fee is $0.14/cwt. for both floor and ceiling open orders, $0.06 for floor or ceiling separately