Fremar LLC

Mission Statement: TO ANTICIPATE, MEET OR EXCEED OUR PATRON'S EXPECTATIONS WHILE PROVIDING LOCAL PROFITABILITY.

Grain - Feed - Agronomy - Petroleum         605-648-3941 or Toll-Free: 800-658-3544, Fax: 605-648-3943
General Manager: Steve Domm                                                      Main Office Hours: Monday - Friday    7:30 AM - 5:00 PM
Main Office: 44608 - 273rd Street, Marion SD 57043                                                                             Closed Saturday & Sunday

	Contracts

SELL CASH GRAIN & BUY FUTURES CONTRACT

FEATURES

* Immediate Delivery * Futures Market Portion Priced at Time of Transaction, But Buying the Futures Contract Allow the Producer to Continue to Participate in the Market * Basis Priced Immediately * Payment for Cash Grain Portion Received Immediately

DEFINITION This strategy is an alternative which grain is sold for immediate shipment at current prices. The second portion of this strategy is to purchase a futures contract. Hence, if the futures market rallies a profit could be earned, but if the futures market declines a loss could be incurred. This allows the seller of cash grain to receive cash immediately while allowing the buyer to participate in the market. This strategy can be referred to as ¡§reinventoring¡¨ grain. This alternative is very speculative.

ADVANTAGES

* Allows seller of cash grain to receive money immediately.

* Allows the buyer of a futures contract to continue to participate in market after cash grain is sold. If the market rallies this alternative could earn a profit, but this is not done without unlimited risk of loss.

* This alternative may eliminate the sellers risk of quality deterioration of stored grain if delivery is made immediately.

DISADVANTAGES

* Unlimited risk. If futures market declines a long futures position looses money. This is a speculative alternative. Unlike the buying of a call option this strategy involves risk of loss greater than just an option premium.

* Does not allow purchaser to option to lock in carry charges if available unless used in combination with a To-Arrive Contract.

* May tie up money to margin futures position.