Farms Technology, LLC

Farms Technology, LLC

August 24, 2007 14:49 ET

Farms Technology Launches "e-Pit"

e-Pit Executes a Simultaneous Electronic Hedge Order and Cash Grain Purchase utilizing the Dynamic Pricing Platform

OVERLAND PARK, KANSAS--(Marketwire - Aug. 24, 2007) - (AgPR) -- Farms Technology, LLC, www.farmstech.com, announces immediate availability of the e-Pit automated hedging component of the patent pending Dynamic Pricing Platform (DPP). The system has already automatically created and executed several hedges orders relating to specific cash purchases simultaneously. This fully automated transaction process is an industry first and continues to show Farms Technology, LLC's ability to continuously lead the innovation of online commodity origination.

Here is how the DPP e-Pit system works. A farmer can post an offer to deliver cash corn to his or her local buyer using the DPP. The farmer chooses their bushel quantity (5,000), a delivery period (August 07) and a desired cash price they wish to receive for their commodity ($3.00/bushel). This offer immediately appears on the buyer's DPP screen and the buyer assigns a futures contact (e-CBOT September 07 Corn- ZCZ07) and basis level ($-0.30 ZCZ7) is assigned to that particular offer. The buyer's goal, as a hedger, is to purchase the cash grain and immediately obtain a futures sale of the same quantity at their desired basis level. The DPP monitors offers against every tick of the futures market from 9:30 am to 1:15 pm and from 6:30 pm to 6:00 am using the CBOT, KCBT, and MGEX electronic futures markets.

The futures market is ever changing and the DPP allows farmers to obtain their asking prices and buyers to obtain their futures hedges with no slippage. It is a win/win for all parties involved. Todd Ryan, Procurement Merchandiser at CHS Savage location recently approved a 40,000 bushel offer, and on the open of the night trade the Farms Technology e-Pit system automatically submitted the hedge order to the e-CBOT electronic trading platform through R.J. O'Brien's Vantage electronic order entry system. In just a few seconds it was filled and the resulting confirmation of the hedge fill and cash purchase was issued back to both buyer and seller. The only human input to the transaction was the producer making the offer, and the buyer approving the offer into the DPP for monitoring.

In another transaction 5,000 bushels of corn were offered for sale to the CHS Winona River Terminal. This offer was made several cents out of the money when Larry Laber, General Manager of the CHS Winona facility, approved it for monitoring by the DPP. Ten days later the market touched during the day trade sending the hedge order to the e-CBOT pit, and upon match the hedge order was executed through the RJO Vantage electronic order system. This trade occurred automatically about one minute before the close of the market, in what could be best described as choppy trading. Larry Laber noted that he was pleased with the new DPP e-Pit component, because it performed "just like it should."

Farms Technology CEO Jason Tatge says, "Today is a huge day for the grain buyer and the grain producer. The grain origination landscape has just changed dramatically. Farms Technology, LLC has been pursuing this type of functionality for nearly 10 years now and it is finally a reality. Fully automated hedging and purchasing of grain allows producers to execute cash sales of grain anytime the e-CBOT is trading, day or night. For grain buyers, it gives their customers the opportunity to lock-in purchases that are automatically hedged around the clock when their competitors can't. It's a tool that most companies in the grain business can't afford to be without."

Ben Zaitz, President of Farms Technology, relates, "Grain companies who utilize the Dynamic Pricing Platform (DPP) are truly offering their customers a level of service with which nobody can compete. No other company allows producers to execute cash sales the entire 15 1/4 hours that the e-CBOT trades. No other company is automatically routing the resulting hedge orders upon the futures price matching, and no other company is providing instantaneous confirmation of the cash purchase and the hedge order to the seller and the buyer. No company in the grain industry offers this fully automated, fully integrated capability to their customers outside of the DPP."

Tatge adds, "If the producer has ever been unable to get through to the merchandiser by phone and missed an opportunity, or wanted to sell grain while watching the overnight markets trade but couldn't because the grain merchandiser was unavailable, now they can make that sale immediately. Grain producers are very busy people who need the flexibility of expanded hours of business. We're giving the grain industry the tools to serve their customers around the clock, because that is how a growing number of farmers want to sell their crops."

Farms Tech has been working with CHS and R.J. O'Brien for several months on the development and testing of the e-Pit system. Now, any time offers are made on the DPP in 5000 bushel increments, they can be hedged automatically on the e-CBOT platform, which will allow DPP buyers to purchase grain on the overnight markets as well as the day trade. The e-Pit system will also work with the KCBT and MGEX electronic contracts as well.

A buyer no longer needs to pick up the phone or enter the futures order through an online interface. Not only is the DPP/e-Pit completely eliminating slippage, it is also letting buyers and their customers know exactly where they stand on offer execution. Automating the grain merchandising function allows frictionless, accurate information flow and transaction execution. The DPP with e-Pit can place a hedge order, receive confirmation of the fill, execute the cash purchase, and notify both buyer and seller in less than 10 seconds. It is very hard for a human being to do that process once in 10 seconds, but with the DPP and e-Pit can perform this task on hundreds of offers with every tick of the futures market.

The e-Pit component is available to all existing and new Farms Technology DPP customers at no additional charge, and can be integrated with any futures electronic order entry system. For more information about how the DPP with e-Pit can automate your grain buying and elevate your customer service to the highest level, contact Farms Technology toll-free at 1-888-393-6471 or dpp@farmstech.com, or visit them on the web at www.farmstech.com.

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