System and method for automated commodities transactions including an automatic hedging function

• US 20040230520A1
• Filed: 06/17/2004
• Published: 11/18/2004
• Est. Priority Date: 10/18/2000
• Status: Active Grant

• Current Assignee: Farms Technology, LLC (Corteva, Inc.)
• Original Assignee: Farms Technology, LLC (Corteva, Inc.)
• Inventors: Clark, David, Schulze, Mark, Reding, Gary, Nikkel, Chris, Ozkaynak, Carl, Humphries, Walker, Cerreta, Scott, Beadle, Kent, Womeldorf, Dave, Rodriguez, Julia A. Granada
• Granted Patent: US 7,418,423 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

An integrated virtual market is provided that facilitates communication between the producers of a given commodity and the parties wishing to purchase such commodities. This system provides real-time updated information about local pricing being offered by those purchasers. In addition, those producers can post offers that can automatically be accepted by purchasers and have contracts automatically generated. An important consideration from a purchaser'"'"'s prospective is minimizing the risk associated with making such transactions. Due to this, futures contracts are often obtained. The virtual market system of the present inventions automatically requests and obtains futures contracts to hedge the contracts being generated.

Claims

1. A method for executing a transaction between a buyer and a seller comprising:

(a) receiving, by a net market, a first bid from the buyer to purchase a commodity;

(b) receiving, by the net market, commodities exchange pricing information for the commodity;

(c) calculating an updated first bid based on the pricing information;

(d) receiving, by the net market, a second bid from the seller to sell the commodity;

(e) comparing the updated first bid to the second bid;

(f) determining whether the buyer may transact with the seller with respect to the commodity; and

(g) executing a hedge with respect to the transaction.

2. The method of claim 1, wherein the commodities exchange pricing information is received in real time from a commodities exchange.

3. The method of claim 1, further comprising receiving a basis price for the commodity, and wherein the step of calculating the updated first bid comprises a mathematical operation on the basis price and the pricing information.

4. The method of claim 1, wherein the step of executing the hedge comprises automatically buying or selling a security listed on a centralized exchange.

5. The method of claim 1, wherein the step of executing the hedge comprises buying or selling a futures contract by way of the Chicago Board of Trade.

6. The method of claim 1, wherein terms of the hedge are based on the pricing information.

7. The method of claim 1, wherein the net market comprises a server capable of storing and transmitting data by way of the Internet.

8. The method of claim 1, wherein the step of receiving the first bid comprises the buyer accessing the net market by way of the Internet.

9. The method of claim 1, wherein the net market comprises a web site.

10. The method of claim 9, wherein the buyer is associated with the web site.

11. The method of claim 9, wherein the step of receiving the second bid comprises the seller accessing the web site by way of the Internet.

12. The method of claim 1, further comprising notifying the buyer and the seller that the buyer may transact with the seller with respect to the commodity.

13. The method of claim 1, further comprising executing a transaction between the buyer and the seller with respect to the commodity.

14. The method of claim 13, wherein the updated first bid is modified or withdrawn based on the transaction.

15. A system for transacting between a buyer and a seller comprising:

(i) a memory storage device;

(ii) a processor connected to the storage device;

(iii) a program for controlling the processor;

wherein

the memory storage device and the processor are operative with the program to;

(a) receive a first bid from the buyer to purchase a commodity;

(b) receive commodities exchange pricing information for the commodity;

(c) calculate an updated first bid based on the pricing information;

(d) receive a second bid from the seller to sell the commodity;

(e) compare the updated first bid to the second bid;

(f) determine that the buyer may transact with the seller with respect to the commodity; and

(g) execute a hedge.

16. The system of claim 15, operative to receive commodities exchange pricing information in real time from a commodities exchange.

17. The system of claim 15, further operative to receive a basis price for the commodity and calculate the updated first bid by way of a mathematical operation on the basis price and the pricing information.

18. The system of claim 15, operative to execute the hedge by automatically buying or selling a security listed on a centralized exchange.

19. The system of claim 15, operative to execute the hedge by buying or selling a futures contract by way of the Chicago Board Of Trade.

20. The system of claim 15, wherein terms of the hedge are based on the pricing information.

21. The system of claim 15, comprising a server capable of storing and transmitting data by way of the Internet.

22. The system of claim 15, wherein the buyer and seller can access the system by way of the Internet.

23. The system of claim 15, further comprising a web site.

24. The system of claim 23, wherein the buyer is associated with the web site.

25. The system of claim 22, operative to receive the first bid or the second bid by way of the Internet.

26. The system of claim 15, operative to notify the buyer and the seller that the buyer may transact with the seller with respect to the commodity.

27. The system of claim 15, operative to execute a transaction between the buyer and the seller with respect to the commodity.

28. The system of claim 27, operative to modify or withdraw the updated first bid based on the transaction.

29. A computer readable medium comprising a computer program, wherein the computer program is operative to cause a system comprising a memory storage device and a processor to:

(a) receive a first bid from a buyer to purchase a commodity;

(b) receive commodities exchange pricing information for the commodity;

(c) calculate an updated first bid based on the pricing information;

(d) receive a second bid from a seller to sell the commodity;

(e) compare the updated first bid to the second bid;

(f) determine that the buyer may transact with the seller with respect to the commodity; and

(g) execute a hedge.

30. The computer readable medium of claim 29, wherein the commodities exchange pricing information is received in real time from a commodities exchange.

31. The computer readable medium of claim 29, wherein the computer program is further operative to cause the system to receive a basis price for the commodity and calculate the updated first bid by way of a mathematical operation on the basis price and the pricing information.

32. The computer readable medium of claim 29, wherein the hedge is executed by automatically buying or selling a security listed on a centralized exchange.

33. The computer readable medium of claim 29, wherein the hedge is executed by buying or selling a futures contract by way of the Chicago Board Of Trade.

34. The computer readable medium of claim 29, wherein terms of the hedge are based on the pricing information.

35. The computer readable medium of claim 29, wherein the system comprises a server capable of storing and transmitting data by way of the Internet.

36. The computer readable medium of claim 29, wherein the buyer and seller can access the system by way of the Internet.

37. The computer readable medium of claim 29, wherein the system comprises a web site.

38. The computer readable medium of claim 37, wherein the buyer is associated with the web site.

39. The computer readable medium of claim 36, wherein the first bid or the second bid is received by way of the Internet.

40. The computer readable medium of claim 29, wherein the computer program is further operative to cause the system to notify the buyer and the seller that the buyer may transact with the seller with respect to the commodity.

41. The computer readable medium of claim 29, wherein the computer program is further operative to cause the system to execute a transaction between the buyer and the seller with respect to the commodity.

42. The computer readable medium of claim 41, wherein the computer program is further operative to cause the system to modify or withdraw the updated first bid based on the transaction.