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

• US 7,418,423 B2
• Filed: 06/17/2004
• Issued: 08/26/2008
• Est. Priority Date: 10/18/2000
• Status: Expired due to Fees

• Current Assignee: Farms Technology, LLC (Corteva, Inc.)
• Original Assignee: Farms Technology, LLC (Corteva, Inc.)
• Inventors: Clark, David, Schulze, Mark, Reding, Gary, Ozkaynak, Carl, Humphries, Walker, Beadle, Kent, Womeldorf, Dave, Nikkel, Chris, Cerreta, Scott, Rodriguez, Julia A. Granada
• Primary Examiner(s): CUFF, MICHAEL A
• Application Number:
  US10/870,112
• Publication Number:
  US 20040230520A1
• Time in Patent Office: 1,531 Days
• Field of Search: 705/37, 705/26, 705/36.R
• 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 on the net market system bid information for a plurality of buyers of a commodity, the bid information including for each buyer in the plurality of buyers a buyer-specific basis for the commodity;

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

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

(d) receiving an offer from a seller to sell an offered quantity of the commodity to at least one buyer in the plurality of buyers at the buyer-specific flat price for said at least one buyer;

(e) responsive to receiving the offer, attempting to secure a futures contract for the commodity on behalf of said at least one buyer based on the offer; and

(f) if the attempt to secure the futures contract succeeds, generating a contract between said at least one buyer and the seller based on the offer;

(g) wherein steps (c) through (f) are carried out automatically by the net market system without intervention from said at least one buyer.

2. The method of claim 1, further comprising:

(h) rejecting the offer if the attempt to secure the futures contract fails;

(i) wherein step (h) is carried out automatically by the net market system without intervention from said at least one buyer.

3. The method of claim 2, further comprising repeating the attempt to secure the futures contract on behalf of said at least one buyer based on the offer.

4. The method of claim 3, further comprising automatically notifying the seller that offer has not been accepted.

5. The method of claim 1, further comprising:

prompting the seller to provide a second offer if the attempt to secure the futures contract fails; and

automatically attempting to secure a second futures contract for the commodity on behalf of said at least one buyer based on the second offer.

6. The method of claim 1, further comprising:

storing in a displayable customer exchange structure the buyer-specific flat price and at least a portion of the bid information received on the net market system from said at least one buyer; and

transmitting the displayable customer exchange structure to a computer system operated by the seller.

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

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

9. The method of claim 1, wherein the step of attempting to secure the futures contract comprises:

automatically initiating contact with a party licensed to conduct transactions on a commodities exchange;

automatically determining through the party whether a futures contract for the commodity is available on the commodities exchange; and

if the futures contract is available, automatically securing through the party the futures contract between said at least one buyer and the commodities exchange.

10. The method of claim 1, further comprising:

receiving on the net market system for said at least one buyer a desired quantity for the commodity;

storing the desired quantity on the net market system; and

responsive to generating said contract between said seller and said at least one buyer, automatically reducing said desired quantity by an amount equal to the offered quantity.

11. The method of claim 1, wherein the quantity term of the contract generated between the seller and said at least one buyer is equal to the quantity term of the futures contract secured by the net market system.

12. The method of claim 1, wherein the quantity term of the contract generated between said at least one buyer and the seller is less than the quantity term of the futures contract secured by the net market system.

13. The method of claim 1, wherein the quantity term of the contract generated between said at least one buyer and the seller is greater than the quantity term of the futures contract secured by the net market system.

14. The method of claim 13, further comprising automatically securing a second futures contract on behalf of said at least one buyer to account for the difference between the quantity term of the contract generated between said at least one buyer and the seller and the quantity term of the futures contract secured by the net market system.

15. The method of claim 1, wherein steps (e) and (f) are carried out automatically by the net market system without intervention from the seller.

16. A computer system for executing commodities transactions, comprising:

(i) a server;

(ii) a database associated with the server; and

(iii) an application program executing on the server;

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

(a) receive from a plurality of buyers bid information for a commodity, the bid information for each buyer in the plurality of buyers including a buyer-specific basis for the commodity;

(b) store the bid information for said each buyer in the database;

(c) repetitively receive an updated commodity exchange price for the commodity and calculate for said each buyer a buyer-specific flat price based on the buyer-specific basis for said each buyer and said updated commodity exchange price;

(d) receive an offer from a seller to sell an offered quantity of the commodity to at least one buyer in said plurality of buyers at the buyer-specific flat price for said at least one buyer;

(e) responsive to the offer, attempt to secure a futures contract for the commodity on behalf of said at least one buyer; and

(f) if the attempt to secure the futures contract succeeds, generate a contract between said at least one buyer and the seller based on the offer;

(g) wherein steps (c) through (f) are carried out automatically by the server operating under the control of the application program without intervention by said at least one buyer.

17. The computer system of claim 16, wherein the application program is further operative with the server to automatically reject the offer if the attempt to secure the futures contract fails.

18. The computer system of claim 17, wherein the application program is further operative with the server to automatically notify the seller that the offer has not been accepted.

19. The computer system of claim 17, wherein the application program is further operative with the server to periodically repeat the attempt to secure the futures contract on behalf of said at least one buyer based on the offer.

20. The computer system of claim 17, wherein the application program is further operative with the server to automatically:

prompt the seller to provide a second offer if the attempt to secure the futures contract fails; and

attempt to secure a second futures contract for the commodity on behalf of said at least one buyer based on the second offer.

21. The computer system of claim 16, wherein the application program is further operative with the server to:

retrieve from the database the bid information for said at least one buyer;

generate a buyer-specific customer exchange structure based on the bid information and the buyer-specific flat price for said at least one buyer; and

transmit the buyer-specific customer exchange structure for said at least one buyer to a remote computer system operated by the seller.

22. The computer system of claim 21, wherein the buyer-specific customer exchange structure comprises a web page.

23. The computer system of claim 16, wherein the application program is further operative with the server to:

automatically initiate contact with a party licensed to conduct transactions on a commodities exchange;

automatically determine through the party whether a futures contract for the commodity is available on the commodities exchange; and

if the futures contract is available, automatically secure through the party the futures contract between said at least one buyer and the commodities exchange.

24. The computer system of claim 16, wherein the application program is further operative with the server to:

receive for said at least one buyer a desired quantity for the commodity;

store the desired quantity in the database; and

responsive to generating said contract between said seller and said at least one buyer, automatically reduce said desired quantity by an amount equal to the offered quantity.

25. The computer system of claim 16, wherein the quantity term of the contract generated between the seller and said at least one buyer is equal to the quantity term of the futures contract secured by the net market system.

26. The computer system of claim 16, wherein the quantity term of the contract generated between said at least one buyer and the seller is less than the quantity term of the futures contract secured by the net market system.

27. The computer system of claim 16, wherein the quantity term of the contract generated between said at least one buyer and the seller is greater than the quantity term of the futures contract secured by the net market system.

28. The method of claim 27, wherein the application program is further operative with the server to automatically secure a second futures contract on behalf of said at least one buyer to account for the difference between the quantity term of the contract generated between said at least one buyer and the seller and the quantity term of the futures contract secured by the net market system.

29. The computer system of claim 16, wherein steps (e) and (f) are carried out automatically by the server operating under the control of the application program without intervention from the seller.