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Methods and systems for purchase of commodities

a technology of commodities and methods, applied in the field of methods and systems for purchasing commodities, can solve the problems of difficult for buyers to remember, difficulty for hedge buyers to complete transactions, and seller-oriented platforms currently available on the internet to meet the needs of hedge buyers

Inactive Publication Date: 2003-10-16
TATGE JASON G +1
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  • Summary
  • Abstract
  • Description
  • Claims
  • Application Information

AI Technical Summary

Benefits of technology

[0010] The invention is directed to methods and systems for purchase of commodities with concomitant hedging. Multiple buyers and sellers can participate in the platform for any number of different commodities. The invention enables a prospective buyers of commodities the opportunity to automatically procure the commodity at a desired basis level when a seller's price matches a buyer's basis bid, and automatically place an electronic order for a listed commodity to hedge the purchase ("hedge commodity"). The methods and systems of the invention further enable the sellers to: (1) place on offer to sell to a buyer or place the same offer to sell to multiple buyers; (2) view buyer information and select the particular buyers with which to transmit sell data, e.g., based on buyer's requested delivery point; (3) continually monitor the buyers' basis bids, for example, from a Web site; (3) be notified when the sell data conforms to the buy data of a buyer. In one embodiment, sellers will manipulate their sell data to conform to the buyer's bid data, thus, the cheapest buyer will typically prevail and win the seller's offer. A buyer can specify multiple delivery options; his basis will typically reflect, among other variables, his costs corresponding to the particular point of delivery.4.

Problems solved by technology

These "hedge purchasers" face a more complicated series of transactions than do sellers.
Thus, it is not surprising that the seller-oriented platforms currently available on the Internet do not fully satisfy the hedge buyer's needs.
Because of the complexity of completing a transaction, hedge buyers generally spend long hours on the phone to transmit bids, consummate sales, and place their hedge.
It is very difficult for a buyer to remember who is offering what amount and at what price.
With the futures price constantly changing, local basis levels constantly changing, and the phone-ringing non-stop it is difficult to execute transactions in an orderly fashion.

Method used

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  • Methods and systems for purchase of commodities
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  • Methods and systems for purchase of commodities

Examples

Experimental program
Comparison scheme
Effect test

example 1

6.1 Example 1

[0101] Tables 3.1 to 3.4 illustrate an example where a seller (farmer) seeks to sell 10,000 bushels of grain to various buyers (grain elevators). The tables show information that might be displayed on the farmer's interface 300 according to the invention. The farmer calculates a net sell price based on the costs of growing and harvesting the crop and accounting for desired profits (in this example $1.81 / bushel). The farmer logs onto the platform (e.g., Web page) and views data for a number of buyers including bid price, quantity, and other information. The farmer then selects four buyers (Nos. 001-004) at four different locations (in this case grain elevators) for which to place bid data and posts his net sell price of $1.81 / bushel and a freight cost corresponding to the particular buyer's location. As indicated by the Tables 2.1-2.4, the platform automatically calculates the farmers sell price by subtracting the freight price from the net price. The platform also conti...

example 2

6.2 Example 2

[0106] Tables 4.1-4.4 below illustrate a specific example of information that might be displayed on grain elevator 001's interface upon posting an offer to buy 10,000 bushels of grain on the platform to be delivered in Decatur in October. The elevator chose December grain futures to calculate his bid price. The platform of the invention automatically and continually updates the elevator's bid price by subtracting his basis from the current futures price listed by the Chicago Board of Trade.

[0107] As a hedge transaction, the elevator instructed the platform to sell a futures contract for 10,000 bushels of grain from a current futures clearing merchant (for a transaction fee of course) at the Chicago Board of Trade's futures price at the time a sale is consummated with a seller. The buyer calculated the basis to include the cost of the transaction fee, storage costs, elevation costs, other operation costs, and his desired profit.

9TABLE 4.1 Grain Elevator 001's Interface A...

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PUM

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Abstract

The invention is directed to methods and systems for commodities procurement with concomitant hedging. The invention enables automatic commodity purchase at a desired basis level when a seller's price matches a buyer's basis bid and concomitantly automatically placing an electronic commodities order to hedge the buyer's purchase.

Description

[0001] This application is a continuation of application Ser. No. 10 / 209,994, filed on Aug. 1, 2002, entitled Methods And Systems For Purchasing Commodities With Concomitant Hedging, which application is hereby incorporated herein by reference.1. FIELD OF THE INVENTION[0002] The invention is directed to methods and systems for purchasing commodities with concomitant hedging.2. BACKGROUND OF THE INVENTION[0003] Today, the Internet hosts a multitude of sites and protocols whereby the sale of goods and commodities can be consummated. The majority of such sites and protocols are seller oriented where a seller advertises goods or commodities to a multitude of buyers to achieve an optimized selling price. The seller's goal is straightforward, i.e., once the goods are sold, the seller has achieved his objective.[0004] Commodity buyers often hedge their purchases against the listed exchange rate for the same or a different commodity. For example, buyers of agricultural products often sell f...

Claims

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Application Information

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IPC IPC(8): G06FG06Q30/02G06Q30/06G06Q30/08
CPCG06Q30/0226G06Q30/0601G06Q40/04G06Q30/0641G06Q30/08G06Q30/0635
Inventor TATGE, JASON G.FRITSCH, DANIEL SCOTT
Owner TATGE JASON G