SYSTEM AND METHOD FOR AUTOMATED COMMODITIES TRANSACTIONS INCLUDING AN AUTOMATIC HEDGING FUNCTION

• US 20080301034A1
• Filed: 06/06/2008
• Published: 12/04/2008
• Est. Priority Date: 10/18/2000
• Status: Active Grant

• Current Assignee: Farms Technology, LLC (Corteva, Inc.)
• Original Assignee: Farms Technology, LLC (Corteva, Inc.)
• Inventors: WOMELDORF, DAVE, BEADLE, KENT, CERRETA, SCOTT, GRANADA RODRIGUEZ, JULIA A., OZKAYNAK, CARL, REDING, GARY, CLARK, DAVID, NIKKEL, CHRIS, SCHULZE, MARK, HUMPHRIES, WALKER
• Granted Patent: US 7,742,979 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 commodities transaction on a net market system, said method comprising:

(a) receiving from a seller client terminal an offer from a seller to sell a commodity, the offer including an available quantity and an asking price for the commodity;

(b) receiving from a plurality of buyer client terminals a respective plurality of bids from a respective plurality of buyers to buy the commodity, each bid including for each buyer a buyer-specific basis and a desired quantity for the commodity;

(c) receiving from a commodities exchange an updated exchange price for the commodity;

(d) modifying each bid in the plurality of bids to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis for said each bid to the updated exchange price;

(e) storing the offer, the plurality of bids and the updated exchange price in a database associated with the net market system;

(f) if the buyer-specific flat price in a bid for a particular buyer is not less than the asking price for the seller, then attempting on behalf of the particular buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price;

(g) if the attempt to sell the futures contract succeeds, generating a contract between the seller and the particular buyer, whereby the seller is obligated to sell the available quantity of the commodity to the particular buyer for the asking price; and

(h) iteratively repeating above steps (c) through (g) automatically without intervention from the seller or the particular buyer until (1) the contract is generated, or (2) the offer is canceled by the seller.

2. The method of claim 1, further comprising automatically reducing the desired quantity for the particular buyer by an amount equal to the available quantity.

3. The method of claim 1, further comprising transmitting a communication to the seller client terminal to inform the seller that the contract between the particular buyer and the seller was generated.

4. The method of claim 1, further comprising transmitting a communication to a buyer client terminal controlled by the particular buyer to inform the particular buyer that the contract between the particular buyer and the seller was generated.

5. The method of claim 1, further comprising:

(i) generating on the net market system a customer exchange structure for the seller, the customer exchange structure being configured to present to the particular buyer the available quantity and the asking price of the seller; and

(j) transmitting the customer exchange structure to a buyer client terminal operated by the particular buyer.

6. The method of claim 5, wherein the customer exchange structure comprises a web page or a portion of a web page.

7. The method of claim 5, further comprising:

(k) receiving from the buyer client terminal controlled by the particular buyer a bid to purchase the commodity from the seller for an alternate buyer-specific price;

(l) modifying the database so that the buyer-specific basis in the bid for the particular buyer is reduced by an amount equal to the difference between the alternate buyer-specific flat price and the buyer-specific flat price for the particular buyer; and

(m) repeating above steps (c) through (h).

8. The method of claim 1, further comprising:

(i) generating on the net market system a customer exchange structure for the particular buyer, the customer exchange structure being configured to present to the seller the buyer-specific flat price for the particular buyer; and

(j) transmitting the customer exchange structure to a seller client terminal controlled by the seller.

9. The method of claim 8, wherein the customer exchange structure comprises a web page or a portion of a web page.

10. The method of claim 8, further comprising:

(k) receiving an alternate asking price from the seller client terminal controlled by the seller;

(l) modifying the database so that the asking price in the offer for the seller is set to an amount that is equal to the alternate asking price; and

(m) repeating above steps (c) through (h).

11. A computer system for executing a commodities transaction, comprising:

(a) a server;

(b) a database associated with the server; and

(c) an application program running on the server;

(d) wherein the application program is operable with the server to;

i) receive from a seller client terminal an offer from a seller to sell a commodity, the offer including an available quantity and an asking price for the commodity;

ii) receive from a plurality of buyer client terminals a respective plurality of bids from a respective plurality of buyers to buy the commodity, each bid including for each buyer a buyer-specific basis and a desired quantity for the commodity;

iii) receive from a commodities exchange an updated exchange price for the commodity;

iv) modify each bid in the plurality of bids to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis for said each bid to the updated exchange price;

v) store the offer, the plurality of bids and the updated exchange price in a database associated with the net market system;

vi) if the buyer-specific flat price in a bid for a particular buyer is not less than the asking price for the seller, then attempt on behalf of the particular buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price;

vii) if the attempt to sell the futures contract succeeds, then generate a contract between the seller and the particular buyer, whereby the seller is obligated to sell the available quantity of the commodity to the particular buyer for the asking price; and

viii) iteratively repeat (iii) through (viii) automatically without intervention from the seller or the particular buyer until (1) the contract is generated, or (2) the offer is canceled by the seller.

12. The computer system of claim 11, wherein the application program automatically reduces the desired quantity for the particular buyer by an amount equal to the available quantity.

13. The computer system of claim 11, wherein the application program automatically transmits a communication to the seller client terminal to inform the seller that the contract between the particular buyer and the seller was generated.

14. The computer system of claim 11, wherein the application program automatically transmits a communication to the buyer client terminal to inform the particular buyer that the contract between the particular buyer and the seller was generated.

15. The computer system of claim 11, wherein the server is configured to:

(e) generate a customer exchange structure for the seller, the customer exchange structure being configured to present to the particular buyer the available quantity and the asking price of the seller; and

(f) transmit the customer exchange structure to a buyer client terminal operated by the particular buyer.

16. The computer system of claim 15, wherein the customer exchange structure comprises a web page or a portion of a web page.

17. The computer system of claim 15, wherein the application program is further configured to:

(g) receive from the buyer client terminal controlled by the particular buyer a bid to purchase the commodity from the seller for an alternate buyer-specific price;

(h) modify the database so that the buyer-specific basis in the bid for the particular buyer is reduced by an amount equal to the difference between the alternate buyer-specific flat price and the buyer-specific flat price for the particular buyer; and

(i) repeat (d)(iii) through (d)(viii).

18. The computer system of claim 11, wherein the server is configured to:

(j) generate a customer exchange structure for the particular buyer, the customer exchange structure being configured to present to the seller the buyer-specific flat price for the particular buyer; and

(k) transmit the customer exchange structure to a seller client terminal controlled by the seller.

19. The computer system of claim 18, wherein the customer exchange structure comprises a web page or a portion of a web page.

20. The computer system of claim 18, wherein the application program is further configured to:

(l) receive an alternate asking price from the seller client terminal controlled by the seller;

(m) modify the database so that the asking price in the offer for the seller is set to an amount that is equal to the alternate asking price; and

(n) repeat (d)(iii) through (d)(viii).

21. A method for executing a commodities transaction on a net market system, said method comprising:

(a) receiving on the net market system bid information from a plurality of buyers, the bid information including for each buyer in the plurality of buyers a desired commodity, a desired quantity and a buyer-specific basis for the desired commodity;

(b) repetitively receiving from a commodities exchange an updated exchange price for the desired commodity and calculating for each buyer in the plurality of buyers a buyer-specific flat price for the desired commodity based on the buyer-specific basis for said each buyer and said updated exchange price;

(c) storing the bid information on the net market system;

(d) generating on the net market system a web page for a particular buyer in the plurality of buyers, the web page being configured to present to a seller the desired commodity, the desired quantity and the buyer-specific flat price for said particular buyer and to receive from the seller an offer to sell an available quantity of the desired commodity to the particular buyer for an asking price;

(e) transmitting the web page to a seller client terminal controlled by the seller;

(f) receiving the offer from the seller client terminal;

(g) if the buyer-specific flat price for said particular buyer is not less than the asking price, attempting to sell a futures contract for the desired commodity through the commodities exchange on behalf of said particular buyer; and

(h) if the attempt to sell the futures contract on the commodities exchange succeeds, generating a contract between said seller and said particular buyer, whereby the seller is obligated to sell the available quantity of the desired commodity to the particular buyer for the buyer-specific flat price;

(i) wherein steps (b) through (h) are carried out automatically by the net market system without intervention from said particular buyer.

22. The method of claim 21, further comprising transmitting a communication to the seller to inform the seller that the contract has been generated.

23. The method of claim 21, further comprising transmitting a communication to the particular buyer to inform the particular buyer that the contract has been generated.

24. The method of claim 21, further comprising transmitting a rejection to the seller if the attempt to sell the futures contract fails.

25. The method of claim 21, further comprising periodically repeating the attempt to sell the futures contract for the desired commodity on behalf of said particular buyer.

26. The method of claim 21, further comprising automatically reducing the desired quantity stored in the database by an amount equal to the available quantity if the contract has been generated.

27. A method for executing a commodities transaction on a net market system, comprising:

receiving from a seller client terminal an offer from a seller to sell a commodity, the offer including an available quantity and an asking price for the commodity;

receiving from a plurality of buyer client terminals a respective plurality of bids from a respective plurality of buyers to buy the commodity, each bid including for each buyer a buyer-specific basis and a desired quantity for the commodity;

while the offer is not canceled by the seller and no contract is formed based on the offer, iteratively performing the following steps (a) through (e) without intervention from the seller;

(a) receiving from a commodities exchange an updated exchange price for the commodity;

(b) modifying each bid in the plurality of bids to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis for said each bid to the updated exchange price;

(c) storing the offer, the plurality of bids and the updated exchange price in a database associated with the net market system;

(d) if the buyer-specific flat price in a bid for a particular buyer is not less than the asking price for the seller, then attempting on behalf of the particular buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price; and

(e) if the attempt to sell the futures contract succeeds, forming a contract between the seller and the particular buyer, whereby the seller is obligated to sell the available quantity of the commodity to the particular buyer for the asking price.

28. The method of claim 27, further comprising automatically reducing the desired quantity for the particular buyer by an amount equal to the available quantity.

29. The method of claim 27, further comprising transmitting a communication to the seller client terminal to inform the seller that the contract between the particular buyer and the seller has been formed.

30. The method of claim 27, further comprising transmitting a communication to the buyer client terminal to inform the particular buyer that the contract between the particular buyer and the seller has been formed.

31. A computer system for executing a commodities transaction, comprising:

a server;

a database associated with the server;

an application program running on the server;

wherein the application program is operable with the server to;

receive from a seller client terminal an offer from a seller to sell a commodity, the offer including an available quantity and an asking price for the commodity;

receive from a plurality of buyer client terminals a respective plurality of bids from a respective plurality of buyers to buy the commodity, each bid including for each buyer a buyer-specific basis and a desired quantity for the commodity;

while the offer is not canceled by the seller and no contract is formed based on the offer, iteratively perform (a) through (e) below without intervention from the seller;

(a) receive from a commodities exchange an updated exchange price for the commodity;

(b) modify each bid in the plurality of bids to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis for said each bid to the updated exchange price;

(c) store the offer, the plurality of bids and the updated exchange price in a database associated with the net market system;

(d) if the buyer-specific flat price in a bid for a particular buyer is not less than the asking price for the seller, then attempt on behalf of the particular buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price; and

(e) if the attempt to sell the futures contract succeeds, form the contract between the seller and the particular buyer, whereby the seller is obligated to sell the available quantity of the commodity to the particular buyer for the asking price.

32. The computer system of claim 31, wherein the application program automatically reduces the desired quantity for the particular buyer by an amount equal to the available quantity.

33. The computer system of claim 31, wherein the application program transmits a communication to the seller client terminal to inform the seller that the contract between the particular buyer and the seller has been formed.

34. The computer system of claim 31, wherein the application program transmits a communication to the buyer client terminal to inform the particular buyer that the contract between the particular buyer and the seller has been formed.

35. A method for executing a commodities transaction on a net market system, comprising:

receiving from a buyer client terminal a bid from a buyer to buy a commodity, the bid including a buyer-specific basis and a desired quantity for the commodity;

while the bid is not canceled by the buyer and no contract is generated based on the bid, iteratively performing the following steps (a) through (f) without intervention from the buyer;

(a) receiving from a commodities exchange an updated exchange price for the commodity;

(b) modifying the bid to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis to the updated exchange price;

(c) receiving from a seller client terminal an offer from a seller to sell the commodity, the offer including an available quantity and an asking price for the commodity;

(d) storing the bid, the offer and the updated exchange price in a database associated with the net market system;

(e) if the asking price in the offer for the seller is not greater than the buyer-specific flat price in the bid for the buyer, then attempting on behalf of the buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price; and

(f) if the attempt to sell the futures contract succeeds, generating a contract between the buyer and the seller, whereby the buyer is obligated to buy the available quantity of the commodity from the seller for the asking price.

36. The method of claim 35, further comprising automatically reducing the desired quantity for the particular buyer by an amount equal to the available quantity.

37. The method of claim 35, further comprising transmitting a communication to the seller client terminal to inform the seller that the contract between the buyer and the seller has been generated.

38. The method of claim 35, further comprising transmitting a communication to the buyer client terminal to inform the buyer that the contract between the buyer and the seller has been generated.

39. A computer system for executing a commodities transaction, comprising:

a server;

a database associated with the server; and

an application program running on the server;

wherein the application program is operable with the server to

(a) receive from a buyer client terminal a bid from a buyer to buy a commodity, the bid including a buyer-specific basis and a desired quantity for the commodity, and

(b) while the bid is not canceled by the buyer and no contract is generated based on the bid, iteratively perform (i) through (vi) without intervention from the buyer;

i) receive from a commodities exchange an updated exchange price for the commodity,

ii) modify the bid to include a buyer-specific flat price, wherein the buyer-specific flat price is calculated by adding the buyer-specific basis to the updated exchange price;

iii) receive from a seller client terminal an offer from a seller to sell the commodity, the offer including an available quantity and an asking price for the commodity,

iv) store the bid, the offer and the updated exchange price in a database associated with the net market system,

v) if the asking price in the offer for the seller is not greater than the buyer-specific flat price in the bid for the buyer, then attempt on behalf of the buyer to sell, through the commodities exchange, a futures contract for the commodity at the updated exchange price, and

vi) if the attempt to sell the futures contract succeeds, generate a contract between the buyer and the seller, whereby the buyer is obligated to buy the available quantity of the commodity from the seller for the asking price.

40. The computer system of claim 39, wherein the application program automatically reduces the desired quantity for the particular buyer by an amount equal to the available quantity.

41. The computer system of claim 39, wherein the application program automatically transmits a communication to the seller client terminal to inform the seller that the contract between the buyer and the seller has been generated.

42. The computer system of claim 39, wherein the application program automatically transmits a communication to the buyer client terminal to inform the buyer that the contract between the buyer and the seller has been generated.