Introduction

When selling a commodity, sellers choose a date in the future in which they plan for the crop to move from it's storage location to the buyer. This delivery is normally either arranged and paid for by the seller, often referred to as a delivered price offer. Or picked up by the buyer, known as the ex-farm price. This delivery date is often bucketed into months and is known as the movement month.

If the seller chooses to move the commodity at a future movement date we define this as forward selling. If the farmer chooses to move the crop immediately this is known as spot trading, you can read more about we define that here.

When the seller offers a forward selling trade, there is a premium applied to the price of the commodity. This is due to the fact that the seller is doing the service storing the commodity for the buyer between the date of trade and the movement month.

You can see this premium most clearly seen when comparing the LIFFE/ICE futures market. For example, see below the London Feed Wheat price for the movements of March 2025, May 2025 and July 2025 between the October 2024 and March 2025.

We can see the final prices were £169 for movement in March, £175 in May and £181 in July. Or a difference of £6 between each price, as all of these prices' movement months are two months apart. For a very simple estimate of the forward selling premium in March we can condense this to a premium of £3 per month.

This analysis will explore this relationship over time and across other sources of marketplace data.

How has FSP changed over time on the LIFFE/ICE?

As discussed in the introduction, it's pretty easy to create a daily estimation of the forward selling premium (FSP). But does this premium change over time? To do this, let's calculate the historic FSP on the LIFFE over time.

If we calculate the average FSP per month over time, we can see that for the last 2.5 years, the FSP has stayed fairly consistent between £1.50 - £2.00.

How does this relate to FSP observed on Hectare Trading?

When buyers bid on listings, they have the option to offer multiple prices on the same listing across different movement months. For example, here's a bid made by GrainCo on some Feed Wheat where they have offered prices across four different movement months.

If we look at the distribution of premiums, we can see that the overwhelming amount of bids with forward options have a premium of £2 per month.

This £2 per month premium is consistent across each super region. It's possible FSP is more normally distributed in the South. But it's hard to draw a definite conclusion with such a small sample.

Across our most significant buyers, there is still clearly a preference for offering a £2 a month premium. However, both Cefetra and Grainco offer a larger variety of premiums. Cefetra often offering more significant FSPs than £2/m and Grainco often falling lower with £1/m being their most preferred FSP amount.

Interestingly, if we compare the average monthly LIFFE forward premium and the FSP observed on Hectare Trading bids over time we can see that this £2 FSP has really settled in the last 6 months.

In fact, the majority of these bids with multiple future price options have been made after September 2024. This is driven by an larger amount of listings with multiple potential movement months, since October 2024, 35-40% of listings have multiple movement options.

This coincides with UX improvements in Hectare Trading during the listing creation process, which made it easier for sellers to select movement ranges. It also marks the start of more consistent efforts by the commercial team to ensure forward options are captured correctly on bid options rather than in free-text notes.

It could be argued that these data points are of a higher quality and therefor more representative set of FSP benchmarks, further suggesting that a general £2/m forward premium is a standard used by buyers.

However, this is an assumption. We should continue to ensure we are capturing as much bid information as possible to the best quality we can and monitor this relationship over time.