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  • 4.10.2-COTTON TRADING-WHEN TO USE THE GUARANTEED MINIMUM PRICE CONTRACT

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  • When to use the guaranteed minimum price contract

    Chapter 4 - Cotton trading - Guaranteed minimum price contracts 

     
     
    • When the market allows the producer to sell at or above his or her break-even price, but the producer feels there is still the potential for more market increases.
    • To allow the producer to deliver the cotton and receive the money today, while still participating in future upside price potential.
    • If the producer believes in future upside price potential, but needs to make a sale in order to obtain finance.