Method and apparatus for pricing a commodity

  • US 7,200,572 B2
  • Filed: 02/02/2001
  • Issued: 04/03/2007
  • Est. Priority Date: 02/02/2001
  • Status: Active Grant
First Claim
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1. A computer-implemented method of pre-setting, in a contract, pricing conditions acceptable to a first party to the contract, where the contract defines a pricing period and is with a second party for future delivery of a predetermined quantity of an agricultural commodity, and where the commodity will have a future, unknown, periodic market price not controlled by the first party but established by a market for the commodity, comprising:

  • (a) selecting, by entry into a computer by the first party, at least one predetermined market factor related to the contract from a predetermined time factor, a predetermined price factor, a predetermined trend factor, a predetermined market status factor, and a predetermined market control factor;

    (b) determining at a first time period during the pricing period at least one of a first market condition from a first time condition, a first price condition, a first trend condition, a first market status condition, and a first market control condition, and communicating the first market condition to a computer;

    (c) providing a formula capable of comparing said predetermined market factor to said first market condition to determine the existence of a favorable pricing condition for a first portion of the predetermined quantity of the commodity;

    (d) applying with a computer said formula to said predetermined market factor and said first market condition during the pricing period to determine the existence or not of a first favorable pricing condition;

    (e) pricing a first portion of the predetermined quantity of the commodity at the market price established at that time by the market when said application of said formula to said predetermined market factor and said first market condition indicates the existence of said first favorable pricing condition, and storing the pricing of the first portion in a computer;

    (f) determining at a second time period during the pricing period a second market condition from a second time condition, a second price condition, a second trend condition, a second market status condition and a second market control condition, and communicating the first market condition to a computer,(g) applying with a computing device said formula to said predetermined market factor and said second market condition during the pricing period to determine the existence or not of a second favorable pricing condition; and

    (h) pricing a second portion of the predetermined quantity of the commodity at a market price established by the market when said application of said formula to said predetermined market factor and said second market condition indicates the existence of said second favorable pricing condition, and storing the pricing of the second portion in a computer;

    so that future pricing of different portions of the predetermined quantity of the commodity by criteria input by and acceptable to the first party are built into the contract for future delivery of the commodity at the formation of the contract, even though the future pricing will be controlled by the market, and not the first party.

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