Glossary of Agribusiness and Futures Trading

Grain Service Corporation March 2011 version 11 New: • updated web links • Asian Options • Calendar Spread Options • Dodd-Frank Wall Street Reform legislation • GASC • GCC • OTC • Renewable Fuel Standard 2 • revised KCBT wheat delivery process • Variable Storage Rate - updated information on CBT delivery program(s)  2011 Grain Service Corporation Version 11

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GSC This Glossary is intended to be a general reference, and not a final standard for developing contracts, resolving disputes, or trading futures and options. The glossary contains common merchandising terms in both domestic and international trading, freight, USDA definitions (farm programs, grades and standards), and terms in the trading of futures and options. We also include our explanations of many unwritten, but commonly-used terms and practices of grain trading, acronyms, and colloqualisms. Refer to the authoritative sources for the respective areas, including USDA, CBOT, National Grain & Feed Association Trade Rules, National Futures Association, for rules and regulations of the various industry sectors. All NGFA Trade Rule references are current. This edition contains numerous links to websites, some of which are authoritative sources; others included solely to provide information of interest. The CFTC website, for example, also contains a glossary specifically for futures and options terminology: http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/index.htm This Glossary is not designed to include every term or condition of trading. Rather, its purpose is to serve as a handy guide into the world of agribusiness, futures-trading, and risk-management. While we strive for accuracy, we cannot guarantee the contents, especially as things continue to change around us. We welcome any ideas you have for clarification or for additional terms for future versions. Reproduction in whole or in part without permission is prohibited. prepared by:

Grain Service Corporation Atlanta GA [email protected] www.grainservice.com Ph: 404-233-6067 © 2011 GSC This does not constitute a solicitation to buy or sell commodity futures or options. Trading futures involves risk of loss.

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Glossary 2008 FARM BILL – The final Farm Bill as signed by President Bush in 2008. Reference: http://www.usda.gov/wps/portal/farmbill2008?navid=FARMBILL2008 http://www.usda.gov/documents/Bill_6124.pdf (The final 1770 p. bill) http://www.ers.usda.gov/FarmBill/2008/Overview.htm (PDF, highlights) AAR – Acronym for American Association of Railroads. Reference: http://www.aar.org ABARE – Abareconomics. Australian statistical reporting board. a/c/e - Acronym for “alliance/cbot/eurex.” a/c/e was the electronic trading platform operated by the CBOT, and which replaced Project A in 2000. (See “e-cbot”) ACRE – New in the 2008 Farm Bill, the optional ACRE program guarantees 90% of the [5-year ACRE benchmark State yield X 2-year ACRE program guarantee price] for the crop year and respective commodity. Producers enroll for the remainder of the Farm Bill and must surrender part of their Direct Payment benefit, and accept a lower non-recourse loan rate. (For complete information see the 2008 Farm Bill links.) Reference: http://www.extension.org/pages/ACRE,_SURE_and_Farm_Bill_Analysis ACRE – National Average Market Price – In the 2008 Farm Bill. The greater of (A) the national average commodity market price received by producers during the 12 month market year; or (B) the reduced marketing assistance commodity loan rate. ACRE benchmark farm revenue— In the 2008 Farm Bil.l The 5-yr Olympic average farm crop yields X [ACRE program guarantee price – crop insurance premiums per acre] ACRE benchmark State yield— In the 2008 Farm Bill. The 5-year Olympic average commodity yield per planted acre in the State. Olympic averages throw out the high and low and average the remainder. ACRE-FOOT – A volume of water equal to one acre covered to a depth of one foot; often used to describe the volume of a reservoir. One acre foot equals 43,560 cubic feet, or 326,700 gallons. ACTUALS - The actual commodity (See “CASH GRAIN,” “PHYSICALS.”) as distinguished from futures. Used more often in metals and softs trading than grain. E.g., “Most of the impact of a river freeze will be in the actuals.”  2011 Grain Service Corporation Version 11

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ADVANCED BIOFUEL – A renewable fuel other than ethanol from corn starch and for which Green House Gas emissions (GHG emissions) are at least 505 less than the gasoline/diesel it replaces. AFLATOXIN - A carcinogenic mycotoxin produced by the fungus Aspergillis Flavus. Found at times in field crops such as corn. Aflatoxin infestation is often linked to heat stress in growing crops. Aflatoxin is highly toxic, even in small concentrations. Official FDA tolerance for Aflatoxin for human consumption is 0 parts per billion, but has an “action” level which permits levels up to 20 ppb to be marketed for human consumption, lactating animals, and poultry rations (100 ppb on finishing swine, and 300 ppb on finishing cattle). Reference: http://www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=landing&topic=landing

AFLOAT - A term used in barge trading to refer to a barge that has been loaded and released to the carrier. Sometimes the term “afloat on-tow” is used to refer to a barge that has been picked up and included in a tow. E.g., “In an inverted market, there’s sometimes a good premium for afloat barges.” AGENDA 2000 – Reforms to the CAP (See “CAP.”), originally implemented in 1992, were executed under an agreement made in 2000 known as Agenda 2000. The reforms themselves are known as the Berlin Accord. The reforms further EU price supports and switch more income support to direct payments from price per ton. (See “Intervention” and “Restitution.”) AGI (ADJUSTED GROSS INCOME) – (2008 Farm Bill) Threshold income stipulated in the 2008 Farm Bill above which producers would be ineligible for farm program payments, with no exceptions. AgMAS Study – Acronym for “Agricultural Marketing Advisory Services.” The AgMAS study objectively evaluated a number of public marketing advisory services for grains and soybeans. AgMAS is an ongoing study conducted by the University of Illinois that began in the mid 90’s. Reference: http://www.farmdoc.uiuc.edu/agmas/reports/ AGRICULTURAL TRADE OPTIONS - Cash market options on the physical commodity, as opposed to exchange-traded options on futures. Trade options may only be offered on agricultural commodities by firms registered with the CFTC as an Ag Trade Option Merchant (ATOM), or if both buyer and seller exceed certain net worth requirements. Minimum (or maximum) price contracts are not considered trade options as long as delivery of the commodity is required, with the final price the only aspect affected by the option portion of the contract. (See “ATOM” ) AMERICAN-STYLE OPTIONS -- Options that permit exercise at any time on or before the expiration date. (See also “EUROPEAN STYLE OPTIONS.”)

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4 APH – Acronym for “Actual Production History”, a term used in federal crop insurance programs. (See also “MPCI” and “Crop Revenue Coverage.”) Reference: http://www.rma.usda.gov/policies APHIS – Acronym for Animal Plant Health Inspection Service, an agency of the USDA, charged to protect US animal and plant resources to ensure safe and affordable food. Animal welfare, trade issues, and pest and toxins fall under APHIS jurisdiction. (e.g., Karnal bunt, anthrax, BSE.) Reference: http://www.aphis.usda.gov APPLICABLE - A shipment (truck, train, vessel, etc.) which meets the specifications of a contract and can therefore be applied by the seller to fulfill a contract. E.g., “A barge with moisture below 13.0% is applicable on most CIF sales.” APPLY – To notify a buyer that a shipment against a contract is ready for billing. Typically this notification identifies the conveyance (barge or train number), origin, quantity, and grade factors. E.g., “The river station applied 2 barges against their contract this morning, and are waiting for billing instructions.” ARBITRAGE - Simultaneous purchase and sale of the same or nearly equivalent security or commodity, in order to profit from price discrepancies. E.g., “A long in K.C. domestic rail corn and a short in PNW trains is an arbitrage.” AREA YIELD CONTRACTS - (See also “CROP YIELD.”) Futures contracts formerly traded at the CBOT that traded the market’s perception of the eventual USDA yield per acre of specific commodities in a specific state. E.g., Iowa “area yield” futures reflect the Iowa corn yield per acre as quoted by USDA. These contracts are inactive. ARRIVAL DRAFT - A draft payable upon arrival of the shipment, as opposed to a Sight Draft that is payable upon presentation of the draft itself. E.g., “Many poultry companies in the south buy with Arrival Draft payment terms.” ASCS – (See “FSA.”) Agricultural Stabilization and Conservation Service. Formerly a branch of USDA that administered many agricultural programs. Reorganized in 1995 into CFSA. (See “CFSA.”) - Consolidated Farm Service Agency. Referred to as “FSA.” Reference: http://www.fsa.usda.gov/pas/default.asp ASIAN OPTIONS - An exotic option whose payoff depends on the average price of the underlying asset during some portion of the life of the option. AT THE MONEY - Option whose strike price is the same or nearly the same as the current market price. E.g., “If Dec corn is $2.59, then a Dec 2.60 call is ‘at the money’.” ATOM – Acronym for Agricultural Trade Option Merchant. The name coined under the Pilot Program of 1999 by CFTC for firms authorized to offer agricultural trade options.

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5 AWB - Australian Wheat Board. A government grain board that manages Australian wheat exports. E.g., “China recently bought 2 million tonnes of wheat from the AWB.” B20 -A blend by volume of 20% biodiesel with 80% petroleum diesel. (See "Biodiesel.") B100 – Straight 100% biodiesel with 0% petroleum diesel. Engines can run on B100, but cost and availability may be issues. Note: B100 is not 100% soyoil. Biodiesels must meet specific industry and government standards. BAIE-COMEAU – Located at the mouth of the St. Lawrence Seaway, approximately 200 miles east of Quebec City. This port is where facilities can offload or load cargo from “Laker” vessels from or onto larger ocean-going vessels. The St. Lawrence connects to Lake Ontario. BACKWARDATION – A market condition in which a distant (deferred) month futures price is lower than the price of a more nearby month. In grain trading this is known as an inverted market. BANK DRAFT - (See “DRAFT.”) BARGE - A non-self-propelled water-borne mode of transportation. Flat-bottomed, and usually used for bulk cargoes such as grains, fertilizer, salt, etc. Barges used for grain on the Mississippi River system typically hold around 1,400 short tons of heavy grains (roughly 50,000 bushels of corn, 45,000 bushels beans/wheat). BARGE FREIGHT - The cost to run a barge from origin to destination along the Mississippi, Ohio, Illinois, and Missouri river system. Barge freight is traded as a percent of a 1976 benchmark base rate (in $/NT net ton), with a separate base for each station along the river system. Freight is bid or offered depending on a number of terms, including time of loading, type of barge, and the points of origin. Barge freight can be traded privately. Unsuccessful attempts have been made by both the Chicago Board of Trade and the Merchants Exchange of St. Louis to develop trade in barge freight futures. (See “CALL SESSION.”) There are several broad groupings for quote purposes: Mid-Miss (McGregor, IA south to Winfield, MO), Twin Cities (all points one mile north of McGregor up to the head of the Mississippi), Mississippi (Alton through Cairo, IL), Lower Miss (south of Cairo, IL), Ohio River (Cincinnati and south), Illinois River (Chicago and south through Hardin, IL). Mid-Miss points have a base (100%) rate of about 14-17¢/bushel on corn. E.g., “Freight is really hot right now. Turn times are slow, and Mid-Miss is quoted at 575%, with Ohio going for 520% this week.” BASIS (freight) - The geographic point and specifications that contractually define the freight cost obligations of the buyer and seller, regardless of the actual freight costs incurred in making a shipment. Many traders use the term “freight basis” to distinguish this term from “basis” as applied to futures. E.g., “The freight basis of the sale to the Arkansas feeder was ‘FOB Kansas City,’ but the seller applied cars out of Texas.”

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6 BASIS (cash grain) - The difference between a cash grain price and a futures price. More exactly, basis = cash minus futures, i.e. the cash price of grain at a specific point minus the price of an appropriate futures contract. E.g., “The cash price is $2.33 and futures are $2.50, so the basis is -17.” BASIS CONTRACT - A contract initially unpriced, but with a fixed differential versus a futures contract set in the contract. E.g., “The farmer thinks futures could be much higher next summer, so he sold his corn on a basis contract at +10 July.” (See “UNPRICED.”) Many commercial transactions are basis contracts. BASIS POSITION - A merchandiser’s exposure to profit or loss from changes in the basis. References to basis positions usually include time slots. E.g., “Our basis position in corn for next fall is long 3 million bu.” BASIS REPO – Basis repurchase agreement. Grain financing strategy in which a firm sells inventory, backed by collateral warehouse receipts, to a financial entity for payment in full with a simultaneous agreement to buy back the inventory a specified future date at an agreed upon basis. The first transaction is priced, the second transaction remains unpriced until the buy-back date. The objective of basis repo’s is to shift margin-call responsibility from the original seller to the financial entity during the term of the repo. (See “Repurchase agreements.”) BASIS SWAPS - Basis swaps are privately negotiated cleared-only transactions submitted through CME ClearPort where one party agrees to receive a pre-negotiated fixed basis while the other party agrees to receive the basis differential between the cash price of a defined basis region and the referenced futures (floating rate). The basis regions are defined by the exchange and selected by the counterparties to the swap. BAY-COMEAU -- (See “Baie-Comeau.”) BC/FM As a grading factor for corn, and sorghum. From a sample of 1000 to 1050 grams, all broken corn and foreign material that passes through a 12/64 round-hole sieve (5/64 triangular hole for milo) and all matter other than corn that remains in the sieved sample after sieving according to procedures prescribed in FGIS instructions. FM is the material that passes through a 6/64 round hole sieve on corn, and a 5/64 triangular hole sieve on milo, and all matter other than corn that remains in the sieved sample. (See also “FGIS.”) BEAR - A trader who thinks a market will trade lower, that values will decline. BEAR SPREAD - To sell a nearby instrument or asset and buy an equal quantity of a more deferred period. E.g., “To sell January and buy March soybean futures is a “bear spread.” (See “BULL SPREAD.”) BENEFICIAL INTEREST - A term used in FSA programs (formerly ASCS). A producer must have “beneficial interest” in a commodity to place it under price support loan (or receive an LDP). Beneficial interest requirements include (1) the commodity cannot have been pledged previously as collateral for a price support loan, (2) the producer  2011 Grain Service Corporation Version 11

7 cannot previously have received an LDP on that eligible lot of production, and (3) the producer must have title to the commodity, risk of loss, and control of the commodity. (See “LDP.”) Reference: http://www.fsa.usda.gov/pas/publications/facts/benefint.pdf BID - An “offer” to buy, at a specified price or basis. The grain trade, among others, commonly refers to a proposal to buy as a bid and a proposal to sell as an offer. E.g., “The processor bid us 15 over Jan for 100 December beans; we offered them at 18 over.” BILL OF LADING - A document of title confirming an agreement whereby a carrier accepts a shipment from a shipper and will transport it to a specified destination and deliver it to someone (the consignee) there. Generally there are two types of Bills of Lading: Order Notify, and Straight (or Open). Order Notify B/Ls are negotiable. The date on a Bill of Lading is usually what determines time of shipment. It is often the most critical document supporting requests for payment. E.g., “We sent the draft with the Order Bill and grade certificates by overnight mail, so we should get the wire transfer tomorrow.” Note: some railroads no longer accept Order Notify ladings. BIODIESEL - An alternative fuel produced from renewable resources, containing no petroleum and created through a process known as "transesterification." (Glycerine is a byproduct.) Production sources include animal fat, vegetable oils, or oil from wood pulp waste. It can be used as a pure fuel or as blended. "B20" is a 20% blend, by volume, of biodiesel and petroleum diesel. Biodiesel can be blended with petroleum diesel, and can be used in diesel compression engines. (See also "B20" and "B100.") (Source: biodiesel.org) Reference: http://www.biodiesel.org BIOMASS DIESEL – This includes biodiesel and no-ester renewable diesel (including cellulosic) and which must reduce GHG by at least 50% compared to the fuel it displaces. BIOTECHNOLOGY – biological science when applied especially in genetic engineering and recombinant DNA technology. BOARD CRUSH - The difference between the cost on the CBOT futures market of a bushel of soybeans and the value of the equivalent amount of soybean oil and meal it will produce when processed. A 60 lb. bushel yields about 44 lbs. of meal and 11 lbs. of oil. At the CBOT, the soybean crush is traded as a spread, with bids and offers on the crush value. Therefore, buying 10 soybean contracts (at 5,000 bushels each), selling 9 oil contracts (at 60,000 # each) and selling 11 meal contracts (at 100 short tons each) is a “board crush” spread quantity. Crush margins (cash or futures) are quoted in cents per bushel of soybeans. E.g., “Meal closed very strong today and widened the crush to 55 cents.” (See “CRUSH” and “REVERSE CRUSH.”) BORDER CROSSINGS - Usually refers to Brownsville, Laredo and Eagle Pass, Texas, the common points at which rail grain exports to Mexico cross the border. (See “MIDBRIDGE.”) E.g., “Corn to Mexico traded around $110/ton at the border crossings.”

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BROAD-BASED STOCK INDEX – A stock index that contains 10 or more stocks, has large market capitalization, and whose value is not concentrated in a small number of the components. (See also “Narrow-based index” or “Security futures.”) BROKER (as applied to cash grain or barge freight) - From the NGFA Grain Trade Rules: “A broker is a person, firm or electronic trading platform that is engaged for others, at least partially on a commission basis, in negotiating or facilitating the execution of contracts relative to property of which he has no actual or constructive custody.” (Rule 2) Sometimes the term “broker” is misused to refer to resellers or jobbers. BROKER (futures) - A member of a futures exchange who executes futures or options orders for others. BSE – Bovine spongiform encephalopathy. A chronic, degenerative disease found in sheep and cattle, marked by ‘spongy’ areas of the brain that affect locomotion, temperament, and cognition. Also referred to as “Mad Cow Disease.” Transmission believed to occur through eating meat or bone meal from affected animals. Reference: http://www.fda.gov/oc/opacom/hottopics/bse.html BT CORN - "Bt corn" refers to corn that has been genetically modified by a trait that protects it from damage against specific insect pests. A protective protein that the corn produces protects it against damage by insects such as the European corn borer. Bt corn results from taking genes from a soil bacterium, Bacillus thuringiensis, and making them part of the plants themselves. Monsanto Corporation was the first company to create the synthetic Bt gene. Reference: http://www.extension.umn.edu/distribution/cropsystems/dc7055.html BULGER WHEAT –- Wheat in its whole form, partially hulled, steamed, dried and crushed. A staple of foodstuffs since 4000 BC. (See “GROATS.”) BULL - A trader who thinks a market will trade higher; that the value of a product or index will appreciate. BULL SPREAD - To buy a nearby instrument or commodity and sell an equal amount of a more deferred period. E.g., “To “buy March/sell May” is an example of a corn futures “bull spread.” (See “BEAR SPREAD.”) BULLET TRAIN– An efficiency train, of 75-100 car units (or grouped sets of 25 cars), to be loaded in 24 hours or less. Operated on any line other than the Burlington Northern or Union Pacific railroad. BN and UP refer to the “bullet train” as “shuttle trains.” BULLISH CONSENSUS - A sampling of futures market participants to determine the extent of bullish sentiment. Expressed as a percentage. E.g., “The bullish consensus is 75%; it indicates the market may be topping out because most of the potential buyers have already bought.”

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9 BURY - As in ‘buried trade.’ An agreement by the buyer, seller, and broker (if any) not to reveal any of the terms or principals involved in a trade. E.g., “We didn’t want that trade out in the market, so we asked the buyer to bury it.” BUSHEL BALANCE - An accounting control function to tie postings to grain payables, and receivables to inventory records. E.g., “Our bushel balance was out last month, and we found that we hadn’t invoiced for 5 trucks.” BUSINESS DAY – Under NGFA Trade Rule 30, “Business Day” shall be defined as the hours from 0800 to 1700 hours in Chicago, Illinois, USA, excluding Saturday, Sunday and legal holidays. The term holiday shall mean those scheduled holidays observed by the Chicago Board of Trade, Chicago, Illinois, USA. BUY IN - To purchase grain commercially in order to fill an existing sale commitment. A buyin can also be made by the buyer in the original trade for the account of the seller in the original trade, if the seller has failed to fulfill the contract commitment. Addressed in NGFA Trade Rule 28. BUYER’S CARS - (Also “buyer’s equipment,” “buyer’s barge.”) A term of a trade, usually made FOB the seller’s facility, whereby the buyer has the obligation to provide cars during the shipment period. E.g., “We can sell corn at +15H in railroad cars or +12H in buyer’s cars.” C & F - Cost and freight. Trading term specifying the responsibilities of both buyer and shipper regarding delivery and associated expenses. Shipper is responsible for the cargo itself and the freight cost to move it to destination. Buyer is responsible for insurance coverage. (See “CIF.”) CAFTA – Central American Free Trade Agreement. (Also known as “Dr CAFTA”.) CAFTA is a sub regional trade agreement and treaty which requires market liberalization for trade of goods among Central American participants. In return the US guarantees enhanced market access to participants. The phrase “Dr CAFTA” is an acronym coined after the Dominican Republic joined the agreement in 2004. Reference: www.wola.org/cafta CALENDAR SPREAD - An options arbitrage between different futures months. E.g., “Long March 2.50 corn calls and short July 2.50 corn calls would be a calendar spread.” Also known as a horizontal spread. (See “VERTICAL SPREAD.”) CALENDAR SPEAD OPTIONS – A CBT traded product. “CSOs” are options on the spread between the prices of two futures months. Reference: http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corncso.html

CALENDAR SWAP - Calendar swaps are privately negotiated cleared-only transactions submitted through CME ClearPort where one party agrees to receive a pre-negotiated fixed price while the other party agrees to receive the average daily settlement price of the referenced commodity futures contract during the pre-negotiated month (floating  2011 Grain Service Corporation Version 11 Rev

10 rate). Calendar swaps allow parties to ‘fix’ a price over a longer period of time than a single-day futures price. CALL - An option that gives the buyer the right to buy something at a specified price (the strike price) for a fixed length of time. In the grain trade, calls usually refer to options on futures. (See “OPTIONS,” “PUTS,” “MINIMUM PRICE CONTRACTS.”) E.g., “We suggest that our feed customers use some corn and meal calls to protect themselves against a possible run-up in prices in case it gets dry this summer.” CALL SESSION - Refers to the St. Louis Merchants Exchange where cash CIF corn, beans, wheat and barge freight trading used to be conducted. In the past, this trading had been important to the determination of Gulf grain values. This has been replaced with private transactions in cash, and for awhile, by the Merchants Exchange barge freight futures. (See “Merchants Exchange of St. Louis.”) CANOLA - An oilseed crop; a hybrid of rapeseed which yields a very low cholesterol edible oil. (Crushed primarily for oil as opposed to meal.) Produced mostly in Canada, but also raised in the U.S. CAP - Common Agricultural Policy (of the European Union). A broad term for the EU’s program to maintain a generally uniform approach to production and marketing policies for (EU) countries that raise or trade certain agricultural commodities. Areas covered under CAP include import tariffs, internal price support mechanisms for producers, export subsidies, and similar aspects. Reforms to the CAP were executed under Agenda 2000. The reforms are known as the Berlin Accord. CARRYING CHARGES (reference values) - The amount by which values for shipments in the future exceed values for more nearby shipment slots. What the market is paying for grain storage. Carrying charges can exist in the futures (spreads) and in the basis (cash grain carries being the sum of the two.) Often shortened to “carry.” E.g., “The carry in corn this year looks good coming out of harvest, but it flattens out after January.” CARRYING CHARGES (contractual) - A contract term allowing the buyer to delay shipment for specified charges. Usually appears in train or vessel trades made “buyer’s equipment.” E.g., “We sold that train for Dec 1-10 with carrying charges at ½ cent per day plus interest at 1 over N.Y. prime.” CARRYOVER – Grain, oilseed, and byproduct commodity inventories not consumed during the marketing year. These stocks are said to be “carried over” to the next market/crop year and added to available stocks for that subsequent year. "CASH AGAINST DOCUMENTS" – A term in the NAEGA-2 international grain contract stipulating payment terms: "Net cash in US $, by telegraphic transfer to the bank designated by the seller, against presentation of and in exchange for shipping documents …… (or warehouse receipts ….). Such presentation shall be made in the city of _________." (See "SHIPPING DOCUMENTS.")

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11 CASH GRAIN - Also simply CASH - (See “ACTUALS,” “PHYSICALS.”) The real thing as distinguished from futures. Cash grain contracts usually are shipped or executed, futures contracts are usually canceled through offsets. E.g., “Cash grain prices can be broken down into two parts, the futures price and the basis.” CAT – Commonly-used abbreviation, short for “catastrophic coverage”, a type of federallysubsidized crop insurance. CAT provides minimal protection, but is mandatory (as of the 2002 Farm Bill) for producers receiving federal price support benefits. Reference: http://www.rma.usda.gov/policies (scroll down the page) CBI - Acronym for Caribbean Basin Initiative. A trade partnership crafted in 2000 between the US and numerous other Caribbean area countries to promote economic development and political reform. One feature of CBI allows the import of ethanol processed in Brazil if denatured in a CBI partner country; maximum imports of 7% of US annual ethanol usage (per year). Reference: http://www.ustr.gov/Trade_Development/Preference_Programs/CBI/Section_I ndex.html CBOT - Chicago Board of Trade; an organized, regulated futures and options exchange. Effective July 2007 the CBOT merged with the CME to form the CME Group. Reference: http://www.cbot.com and http://www.cmegroup.com CCC - Commodity Credit Corporation. A government agency associated with FSA (formerly ASCS) which administers programs involving stored commodities and grain owned by the government. When producers forfeit loan grain collateral it is the CCC that assumes ownership. Reference; http://www.fsa.usda.gov/daco/default.htm CELLULOSIC BIOFUEL – A renewable fuel derived from any cellulose or lignin, each of which must originate from renewable biomass, and must attain a GHG reduction of at least 60% compared to the fuel it displaces. CENTER GULF - (See “GULF,” “IN THE RIVER,” “NOLA.”) Refers to shipments to/from the Gulf coast in the New Orleans area; the Mississippi River from Baton Rouge through Myrtle Grove. This is the most important area for grain exports from the U.S., and probably the most liquid market for cash grains in the world. Usually shortened to “Gulf,” while the Eastern Gulf and Texas Gulf are specified as such. CERTIFIED WEIGHTS - “Weights... obtained by a licensed weigher, using a certified scale. A scale shall be considered certified when it meets the requirements specified in the current edition of Handbook 44 (of the National Institute of Standards and Technology) and has successfully passed inspection …..” (See NGFA Trade Rules for additional language, which also defines Class I, Class II and Class III weights.) CFSA - (CONSOLIDATED FARM SERVICE AGENCY) (See “FSA.”)

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12 CFTC - The Commodity Futures Trading Commission. Federal regulatory agency that oversees commodity futures trading, and enforces the Commodity Exchange Act and the Futures Trading Practices Act. Reference: http://www.cftc.gov/ CHEAPEST TO DELIVER – A method to determine which particular cash instrument is most profitable to deliver in satisfaction against a futures contract. (CBOT Glossary). CIF - Cost, insurance, and freight. Merchandising and trading term clarifying obligations and responsibilities of both buyer and seller/shipper. Shipper is responsible for cargo and freight to destination, as well as insurance while enroute. Commonly used in domestic barge trading. CIF is generally equivalent to selling “delivered” in truck/rail trading, although there are additional responsibilities associated with CIF trading beyond those described here. E.g., “They traded 6 barges today, CIF NOLA, shipment FH September.” CIRCLE - A reseller string in which each party has both a purchase and sale with other parties in the string, so that the string forms a closed loop, or circle. Circles are often canceled out at some settlement price. CIS - (See “COMMONWEALTH OF INDEPENDENT STATES.”) CLASS I RAILROAD - ICC classification for railroads with annual (2005) revenue of $319 million or more. The revenue threshold is adjusted annually for inflation. Class I railroads in 2006 operated almost 95,000 miles of track: BN/SF, CSX, Grand Truck Western, KCS, NS, SOO Line, and UP. Two Canadian lines (CP and CN) have sufficient US lines they would be Class I if US-owned, and two Mexican lines would also qualify (Ferricarril and Mexicano) (See “REGIONAL” and “LOCAL.”) Reference: http://www.aar.org (statistics section) http://www.aar.org/PubCommon/Documents/AboutTheIndustry/Statistics.pdf

CLASS II RAILROAD - ICC definition of railroads with annual revenues of $40 to $318 million (1992 levels, adjusted annually for inflation). The classification is no longer of much value, because non-Class I railroads no longer have to report financial information to the ICC. The AAR (American Association of Railroads) developed new non-Class I categories: Regional and Local roads. (See “REGIONAL” and “LOCAL.”) CLASS III RAILROAD - ICC definition of railroads with annual revenues of less than $40 million (1992 levels, adjusted annually for inflation). The classification is no longer of much value, because non-Class I railroads no longer have to report financial information to the ICC. The AAR (American Association of Railroads) developed new non-Class I categories: Regional and Local roads. (See “REGIONAL” and “LOCAL.”) CLEARPORT – A flexible internet-based electronic trading system operated by the CME/NYMEX. Reference: http://www.cmegroup.com/clearing/clearport/index.html  2011 Grain Service Corporation Version 11

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CME Clearport – (See “CLEARPORT.”) Reference: http://www.cmegroup.com/clearing/clearport/index.html CME GROUP The entity formed in 2007 from the merger/buyout between the CBOT and the CME (Chicago Mercantile Exchange). Reference: http://www.cmegroup.com COARSE GRAINS - Includes corn, milo (sorghum), barley, and oats. (See “FEED GRAINS.”) COFCO - China National Cereal, Oil and Food Import & Export Co. (COFCO) Reference: http://www.cofco.com/en/ COFO - (Commercially Objectionable Foreign Odor.) Used on grade certificates to refer to odors, such as smoke odors, not caused by the grain itself. COLLATERAL WAREHOUSE RECEIPT - Refers to a warehouse receipt issued to a financial institution on unencumbered grain owned by the warehouseman. COLLECT - (as in “freight collect”) Originally used to refer to rail shipments on which the agent at the destination (as opposed to the agent at origin) would collect freight charges. With modern railroad billing procedures, this has lost much of its meaning. COLT- Cargill On Line Trains, used to refer to unit trains on the ICG Railroad. The unit train concept was pioneered by Cargill with the original COLTs, which were 125-car units cycling between Eastern Illinois and the Gulf. COMMITMENT OF TRADERS REPORT – A weekly report issued each Friday by the Commodity Futures Trading Commission (CFTC) which provides a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. Open interest is broken down by “large commercial”, “non-commercial” (large speculators), and nonreportable (small traders) holdings. A separate report, begun in 2006, reports the positions held in agricultural futures by Commodity Index Funds separate from other “large commercial” holdings. (Index funds are classed as hedgers and their holdings show in the large commercial category on the combined report.) Reference: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm COMMODITY CERTIFICATES – Implemented as part of the Fiscal Year 2000 US Agricultural Spending Bill, which amended the FAIR Act of 1996. This amendment provided the Secretary authority to make ‘in-kind’ payments under the nonrecourse marketing assistance loan and LDP programs. CCC was granted the authority in 2000 to issue negotiable electronic certificates to eligible producers, which may be immediately exchanged for a commodity owned or controlled by CCC. No secondary market in such certificates can exist due to the structure of the program. Any ‘marketing loan gains’ accrued under such a certificate program are not subject to the  2011 Grain Service Corporation Version 11 Rev

14 payment cap under the Farm Bill. The commodity certificate program was reauthorized under the 2002 Farm Bill. COMMODITY FUTURES TRADING COMMISSION – The Commodity Futures Trading Commission. Federal regulatory agency that oversees commodity futures trading, and enforces the Commodity Exchange Act and the Futures Trading Practices Act. Reference: http://www.cftc.gov/ COMMONWEALTH OF INDEPENDENT STATES – Organization founded in 1991 of twelve former Soviet Union states to support economic objectives and promote trade. Reference: http://cisstat.com/eng/index.htm CONASUPO – The Mexican government’s food agency, primarily involved in corn trading. Conasupo used to be a dominant force in trading, but has largely been replaced by private, cross-border trading. Reference: http://www.reap.ucdavis.edu/research/CONASUPO.pdf CONFIRMATION OF TRADE - A written document that confirms the terms of an oral contract to trade grain, freight, etc. It’s important to note that in most grain trades, the oral agreement is the contract and the written document is a confirmation. Even without a signature of one of the two parties involved in a confirmation, the oral contract is still enforceable in many situations. (See “CONTRACT.”) CONSEC’S - A term used in train trading and the negotiating of contracts for train freight. Short for consecutive movements without breaking up the train. E.g., “The railroad will give us the rate we asked for, but they want at least 5 consec’s.” CONSTRUCTIVELY PLACED (CP’D) - Usually applied to rail shipments. The time at which the carrier makes the cars available to the loader or unloader and the meter starts running on any time limits with the carrier or other party to load or unload, inspect, pay, etc. E.g., “We sold that corn train guaranteed to arrive cool & sweet, but the buyer has to inspect it by noon on the day following CP.” CONTAINERIZED SHIPMENTS – Standardized container units which can be transported on flat rail cars, stacked on ocean vessels, or attached to trucks. Volume displaced by containers is measured in TEUs (twenty-foot equivalent units). The volume of US grain exported via containers has risen steadily in recent years, first with specialty grains and now including bulk grains. In 2009 5% of US waterborne grain exports were shipped in containers, and 6% of grain exports to Asia. (See also “TEU.”) In 2010 monthly shipments ranged from 30 to 40,000 TEUs. (See also “INTERMODAL, PANAMAX, POST-PANAMAX, SUPER-POST-PANAMAX, ULCS, TEU.”) Reference: http://www.export911.com/e911/ship/conShip.htm Reference: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=Tem plateA&navID=AgriculturalTransportation&leftNav=AgriculturalTransportation& page=ATGrainTransportationReport&description=Grain%20Transportation%2  2011 Grain Service Corporation Version 11

15 0Report%20(GTR)&acct=graintransrpt (Grain Transp. Reports) (This report includes statistics on shipments and rates. ) CONTANGO – A time when distant delivery prices for futures exceed spot prices, often due to the costs of storing and insuring the underlying commodity; opposite of backwardation. In grain terminology ‘contango’ is equivalent to a carrying-charge market. CONTRACT - The actual agreement that binds buyer(s) and seller(s). Contracts may be verbal or oral. In a written contract, without the signature of both parties enforcement of the terms by one party against the other may be difficult in some states. Contracts differ from confirms. E.g., “In some states, farmers aren’t considered merchants, and it’s hard to enforce contracts that don’t have their signature.” (See “CONFIRMATION OF TRADE.”) CONVENTIONALLY HEDGED - Placing and keeping hedges in the futures months immediately following the shipment period of cash grain trades, and keeping inventories hedged in the nearby months. CONVERGENCE - The tendency for cash and futures prices to come together in the delivery market in the delivery month. COOL – Acronym for “Country of Origin Labeling.” US legislation mandates COOL for many food imports; this issue has been debated continuously since 2002. Final regulations were implemented in March 2009. Reference: http://www.ams.usda.gov/AMSv1.0/cool CORN GLUTEN FEED - (See “GLUTEN FEED.”) COT - Certificate of Transportation. A forward commitment for rail car placement and movement to destinations in certain transportation corridors, offered at auction by the BN Railroad. Reference: http://www.bnsf.com COTTONSEED – Whole cottonseed is high in protein, fat, fiber and energy. Whole cottonseed with the lint still attached is white and fuzzy and is known as "fuzzy seed.” Whole cottonseed from which the lint has been removed is called delinted seed. It is black and smooth in appearance, and tends to be slightly higher in protein and fat than the fuzzy seed. Whole cottonseed does not have to be processed before feeding. It is often used in dairy rations, as studies show it can raise milk fat. COTTONSEED MEAL - A protein by-product from the extraction of oil from whole cottonseed. It has about 89% of the energy value of 44% soymeal, approximately 41%. COUNTER-CYCLICAL PAYMENT (CCP) – A term in the 2002 & 2008 Farm Bills that provides for income payments to producers when commodity price(s) fall below predetermined "Target" levels. Payments are made on Program Acres X 85% X  2011 Grain Service Corporation Version 11 Rev

16 updated Program Yield. Payments are totally decoupled from farm production. The payment rate (if any) is equal to the Target Price minus the higher of (1) the 12-month USDA average cash price + the Fixed Direct payment rate (2) loan rate + the Fixed Direct payment rate. Reference: http://www.ers.usda.gov/features/farmbill/analysis/counterCyclicalPayments2002act.htm (See also "Fixed Direct Payment" and "Target Price.") COVERED CALL - Usually used in options trading. CFTC defines this as “a short call or put option position that is covered by the sale or purchase of the underlying futures contract or other underlying instrument. For example, in the case of options on futures contracts, a covered call is a short call position combined with a long futures position.” E.g., “He was selling covered calls. He is long Dec corn futures and short Dec 3.20 calls.” CRB – Commodity Research Bureau. A commodity research service that compiles data and indices on numerous financial and physical contracts. The CRB Indices reflect a broad and diverse array of markets. Reference: http://www.crbtrader.com/crbindex/ CRC (See “CROP REVENUE COVERAGE.”) One type of protection under federally subsidized crop insurance. Reference: http://www.rma.usda.gov/policies (scroll down) CRI - A payment term. Cash due upon receipt of invoice. Sometimes “NOR,” net cash on receipt of invoice. E.g., “He pays promptly and is financially sound, so we sell him CRI rather than drafting.” CROP INSURANCE – The USDA provides federal subsidies to qualified agricultural participants for the purchase of crop insurance offered by private companies. This program is administered by the Risk Management Agency, and subsidy levels are set as part of the Farm Bill legislation. Yield-based coverage includes MPCI and GRP policies. Revenue-based coverage includes CRC, IP, Revenue Assurance, GRIP, and Adjusted Gross Revenue.) Reference: http://www.rma.usda.gov CROP REVENUE COVERAGE (CRC) – A type of federally subsidized crop insurance available to farmers that pays in the event of certain revenue shortfalls. Indemnity payments are based on producer’s actual yield times the higher of two designated futures price levels. (See also “MPCI”.) Reference: http://www.rma.usda.gov/policies CROP YIELD FUTURES - (See “AREA YIELD.”) Futures and options contracts formerly listed at the CBOT that traded the market’s perception of the USDA yield per acre of specific commodities in a specific state. No longer listed for trading.

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17 CROP YEAR – Twelve month period that describes a production/market cycle of agricultural products. For USDA statistics and for FSA program benefit purposes, crop years are: • Corn, grain sorghum, soybeans, rice: September 1 thru August 31 • Wheat, oats, barley, canola: June 1 thru May 31 • Cotton: August 1 thru July 31. CROSS-HEDGE - To hedge one commodity with futures contracts for another but related commodity. E.g., “When the price of wheat gets extremely low relative to corn, aggressive traders will consider cross-hedging long cash wheat in corn futures.” CROTALARIA – An alkaloid plant whose seeds and leaves are poisonous. Maximum crotalaria seeds are a grading factors for some crops. (#1 wheat may contain no more than 2 crotalaria seeds.) CRP - (Conservation Reserve Program.) A USDA program that allows land owners to retire land from production for up to 10 years in return for an annual “rental” payment from the USDA. Developed in part to remove environmentally fragile land from production. Reference: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=copr&topic=crp-st CRUSH - (verb) To physically process soybeans, or other oilseeds, for the value of the products they contain. Crushing soybeans yields soymeal and soyoil, for example. CRUSH MARGIN (board) - (noun) The difference between the cost on the CBOT futures market of a bushel of soybeans and the value of the soybean oil and meal it will produce when processed. Quoted in terms of cents per bushel, and traded as a spread. Generally: 10 contracts of soybeans + 11 (100 ton) contracts of soymeal + 9 (60,000#) contracts of soyoil. E.g., “Meal closed very strong today and widened the crush to 55 cents.” (See “BOARD CRUSH,” and “REVERSE CRUSH” for crush specifications.) CRUSH MARGIN (cash) - (noun) The gross margin available to a soybean processor; it’s the difference between the cost of a physical bushel of beans and the value of the meal and oil it yields. (See “BOARD CRUSH.”) E.g., “The soybean basis has really soared, and it’s hard to sell meal. If the crush margin gets much lower, plants will start to take some down time.” CRY9C gene – From Bacillus thuringiensis (Bt) subspecies tolworthi; it encodes an insecticidal protein effective against the European corn borer. The CRY9C protein provides an effective insect management strategy for the corn borer. “Starlink” is a trademark name by Aventis Crop Science for corn varieties containing the CRY9C gene. Use of CRY9C corn was limited by EPA due to insufficient proof the protein would not pose an allergenic risk to humans. Reference: http://www.epa.gov/pesticides/biopesticides/pips/regofbtcrops.htm Type in “ cry9c gene” in the EPA “search” box for additional information

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18 CUPOS – Import permits issued by Mexico's government. The NAFTA Tariff Rate Quota ("TRQ") for US corn for calendar year 2004 was 2.5 million tons on corn. (See also "TRQ.") Reference: http://www.fas.usda.gov/itp/policy/nafta/tariffic.html CWB - (Canadian Wheat Board.) The government grain board which manages the export of wheat from Canada. Reference: http://www.cwb.ca/en/index.jsp CYCLE TRAIN - Unit trains of 25-100+ cars operated typically with trips to a single destination from various potential origins. Limited to certain destinations. DARK NORTHERN SPRING WHEAT – (See “DNS.”) DDG – (See "DISTILLERS DRIED GRAINS.") Also DDGS. DDGS – Distillers Dried Grains Solubles. Byproduct of ethanol fermentation from corn and used for animal feed. Approximately 17 pounds of DDGs are produced from fermented 1 bushel of corn. Reference: http://www.badgerstateethanol.com/downloads/dist_dry.pdf DEAD FREIGHT - A term usually applied to rail shipments. Refers to excess freight incurred because cars do not meet the minimum weight requirements of the railroad tariff or grain contract. DECOUPLED FIXED PAYMENT – A proposal in early 2002 Farm Bill language that corresponded to the 1996 transition payments. Was replaced in the final bill by the term "Fixed Direct" payment. (See also "COUNTERCYCLICAL PAYMENTS.") DEFERRED PAYMENT - A payment term in which the seller agrees to defer payment. Most often encountered when farmers wish to defer income for tax reasons. The most common type of Deferred Payment is on grain delivered and sold to a country elevator in the fall on which the farmer doesn’t want payment until January. Note: Deferred payment is not the same as Delayed Price. (See “DELAYED PRICE.”) DEFICIENCY RATE – Under the 1990 Farm Bill, this was the amount paid by USDA to eligible producers to offset the difference between calculated market values and a Target Price as described in the (old) Farm Bill. E.g., “USDA paid out a 50¢ deficiency rate last year, because the average cash price was $2.25 and the Target Price is $2.75.” This provision was replaced under the FAIR Act of 1996 and the 2002 Farm Bill with different protections. There is no exact equivalent in current legislation. DELAYED PRICE - (Also known as Deferred Price, No Price Established -‘NPE’) An unpriced grain trade in which title passes upon delivery, but neither the basis nor a futures price is set. The seller has the right to price later, at the price in a specified local market at that time, less service charges (if any). (Usually used as a substitute for  2011 Grain Service Corporation Version 11

19 storage.) E.g., “This year we’re letting farmers sell corn on D.P. in the fall and price at our board price by January 2, for a service charge of 8 cents per bushel.” DELIVERABLE STOCKS - Grain stocks that meet futures delivery quality specifications, and are located in warehouses whose shipping certificates or warehouse receipts are acceptable in the futures delivery process. “Deliverable stocks” on corn, soybeans and wheat are less important for the Chicago Board of Trade contracts, due to the new Shipping Certificate delivery system (See “ILLINOIS WATERWAY DELIVERY SYSTEM.”) DELIVERY VALUE EQUIVALENT - A basis level sufficient to allow moving grain into or out of a futures delivery position. More exactly, a negative basis which is equal to the cost of moving grain into delivery position from shipping points in surplus areas, or a positive basis equal to the cost of moving grain from futures delivery houses to receiving points in deficit areas. E.g., “If the premium to futures charge is 4 cents, and freight from Chicago to the New Orleans area is around 30 cents, the delivery value equivalent of grain delivered the Gulf is around 34 over.” Sometimes called “freight off delivery.” DELTA - In options trading, it refers to the rate of change in the price of an option vs. a change in the price of the underlying futures contract. Delta is usually expressed as a decimal between zero and one. ‘At the money’ options have a delta of approximately .5; deep out of the money options have a delta approaching zero; deep ‘in the money’ options have a delta that approaches 1.0. E.g., “If a 10 cent change in the futures will result in a 5 cent change in the option premium, the option has a delta of .50.” DELTA HEDGE – A dynamic hedging strategy using options that calls for constant adjustment of the number of options used, as a function of the delta of the option. For example, to be 100% hedged in soybeans using ‘at the money’ puts, one would need to own 2 puts for every 5,000 bushels of inventory price risk, because the delta of an ATM put is .5 . Using deep in the money puts to hedge would require closer to 1:1 due to the higher delta. DEMURRAGE - Charges incurred for failure to either (1) load and bill a shipment being made, or (2) unload and release the transportation on a shipment being received within the time specified by the governing contract or tariff (free time). DERIVATIVES - Any financial instrument whose value is derived from, or based on, the value of another asset, instrument, or commodity. (E.g., corn futures are actually a derivative; their value is based on the value of cash corn in Chicago. “Swaps” are also derivatives.) Other agricultural derivatives include “weather-derivatives” where a value may tie to temperature or precipitation. (See “SWAP.”) Reference: http://www.margrabe.com/Dictionary.html DHV - Dark, hard, vitreous. Descriptive factors for wheat kernels. Used in the classification of Durum, Hard Red Spring, and White wheats into subclasses. (See “WHEAT.”)

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20 DIFFERENTIAL – (In FSA usage) A value that is applied against CCC terminal market values to determine a local market value referred to as the Posted County Price (PCPs). E.g., “The differentials for that area of the state are 13¢ off Chicago and 18¢ off Milwaukee.” (See “PCP.”) This term is of little relevance in the current environment of high prices and minimal to zero government stocks. DIRECT PAYMENTS (Farm Bill) – (See “Fixed Direct Payments.”) DIRECT SHIP - ( Also DS.) A reseller trade. The shipment is handled on paper but not physically handled (elevated) by a party in the middle. E.g., “Grain bought FOB a farm bin by a country elevator and trucked directly to a processor is said to be direct ship.” (See “RESELLER.”) DIRECTED FUNGIBILITY (See “FUNGIBILITY.”) DISPATCH - Roughly the opposite of demurrage. A premium paid for loading or unloading a shipment before the expiration of its free time. DISTILLERS’ GRAINS (DDG) - A product from the wet milling of corn for ethanol. These unfermented corn residues are mainly protein, fiber, fat, used in feeding ruminant animals. Available as dried distillers’ grains, or as DDG with solubles (DDGS) which contains 30-40% dry matter. DGGS is the product from condensing and drying the stillage that remains after fermenting the starch in the production of ethanol. It is high in protein (around 27%), energy, minerals, and vitamins. Approximately 17 pounds of DDGs are produced from distillation of one gallon of ethanol. (See”DDGS.”) Reference: http://www.ddgs.umn.edu DLQ - Distinctly Low Quality. A grading term - Official U.S. Standards for Grain. “Grain that is obviously of inferior quality because it is in an unusual state or condition, and that cannot be graded properly by use of other grading factors provided in the standards. DLQ includes presence of objects too large to enter the sampling device; i.e. large stones, wreckage, or similar objects.” DNS - Dark Northern Spring wheat. A subclass of Hard Red Spring wheat. DNS wheat is HRS wheat containing 75% or more of dark, hard, and vitreous kernels. (See “WHEAT,” “HRS,” “NS.”) Reference: http://archive.gipsa.usda.gov/reference-library/standards/810wheat.pdf http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/durum.pdf

DOCKAGE - A grading term. Refers to non-grain material mixed with the grain. USDA Standards: “In wheat, dockage is all matter other than wheat that can be removed from the original sample by use of an approved device prescribed by FGIS procedures. Includes undeveloped, shriveled, and small pieces of wheat removed in properly separating the material other than wheat and that cannot be reclaimed by rescreening or recleaning.” DODD-FRANK WALL STREET REFORM - Legislation signed by President Obama in July 2010 which is a sweeping revamp of regulation of the American financial sector,  2011 Grain Service Corporation Version 11

21 including banks, equities, commodities, swaps and other financial services/products. Hallmarks of the bill include increased consumer protections and tighter oversight and a more global approach to risk. DOUBLE M - (See “WAMM.”) DPR - (Daily Position Report.) A report kept by warehouse operators showing grain assets and liabilities, often in a format required by a warehouse regulatory agency. Usually does not include futures positions or forward cash contracts. DRAFT (financial) - An order for payment of money drawn by one person or bank on another. In grain, a collection procedure whereby the seller’s bank transmits to the buyer’s bank an invoice with documentation attached (usually including a negotiable document such as a bill of lading). The seller’s bank can instruct the buyer’s bank to collect good funds from the buyer before releasing the documentation. This in turn often controls release of the rail-cars or barges to the buyer. This provides credit protection for the seller. DRAFT (water transportation) - The depth of the lowest part of the barge or ship below the surface of the water. The minimum water depth before striking bottom. “DRC”TM –Decision Rule Contracts SM. A grain risk-management tool for producers and a grain contract management service offered through E-Markets e-commerce firm, that utilizes the Internet as the operating platform. The DRC system offers varying pricing models that producers may use to tie to cash contracts or offers with grain buyers. Reference: (www.e-markets.com ) DRY MILLING – Dry milling of corn for ethanol involves grinding corn, then liquefying it, followed by fermentation. The products include ethanol, distillers dried grains (DDG) and CO2. (Source: Downstream Alternatives research project for the Department of Energy.) DURUM - A class of wheat. The hardest of all U.S. wheat; grown primarily in North Dakota. Used to make flour for pasta production. Little of the U.S. durum production is exported. The subclass “Durum wheat” is Durum with less than 60% of dark, hard, and vitreous kernels. Other subclasses of Durum include Hard Amber Durum (75% or more hard and vitreous kernels of amber color, and Amber Durum (60% but less than 75% hard, vitreous amber kernels). (See “WHEAT.”) Reference: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/durum.pdf DWARF BUNT Tilletia controversia Kuhn. – Also known as TCK. A fungus that sporadically infects winter wheat crops in the Pacific Northwest, but poses no human health risk. Under certain conditions it damages the wheat kernel. Reference: http://www.agf.gov.bc.ca/cropprot/dbunt.htm "E10" - Acronym for a blend of 10% ethanol/90% ordinary unleaded gasoline. E10 and E85 are the most common blends for ethanol at this time.

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“E15” – Effective January 2011, EPA regulations allow certain classes of vehicles to use E15, a blend of 15% ethanol/85% ordinary unleaded fuel. Approved classes include new and used cars 2001 model or newer; 2001 and newer light-duty trucks; and 2001 and newer SUVs. Reference: http://www.epa.gov/otaq/regs/fuels/additive/e15/ "E85" - Acronym for a gasoline/ethanol blend that is 75-85% denatured ethanol, with the balance petroleum products. Used in specially designed vehicles called "Flexible Fuel Vehicles." Reference: http://www.ethanolrfa.org/pages/e-85 Reference: http://www.e85fuel.com/ (FAQs, locations, vehicles) EARN THE CARRIES - Usually refers to basis levels. A market in which deferred time slots trade at a premium (carry) to the nearby, then hold their value as a deferred slot becomes current (spot), is said to ‘earn the carries.’ E.g., “CIF corn was bid +25 CH for Jan and +30 CH for March. By March 1st, FH March CIF was still bid +30CH, so we ‘earned the carry’ from January values.” EASTERN GULF - The export elevators at Pascagoula, MS and Mobile, AL. No longer used for active bulk shipment of export grain. e-cbot – The former electronic trading platform at the CBOT. Replaced by GLOBEX platform after the CME/CBOT merger. Corn, soybeans, wheat, oats, KC and Minneapolis wheat were all offered on this platform for daytime and overnight trading. (The CBOT offers products from other exchanges through licensing agreements.) The trading platform is powered by the LIFFE (London). Effective August 1, 2006, “side by side” trading took effect in these agricultural commodities, offering electronic ecbot or pitexecution of orders in full-size futures contracts. In 2008 electronic trading shifted to the CME Group GLOBEX platform. EDI - Electronic data interchange. A system that uses a network of terminals to communicate data. Used to transmit rail bills of lading, weights, grades, or any other data related to commerce. EEC - European Economic Community. The Common Market. (See “EU” and “CAP.”) EEP - Export Enhancement Program. A federal program that subsidizes U.S. commodity exports by paying export sellers a market difference between world prices and U.S. domestic prices (FOB U.S. ports). E.g., “U.S. wheat is worth $5.00/bushel FOB Texas Gulf, but the world price is $4.80, resulting in the need to subsidize sales by 20¢/bu.” EFP - To Exchange Futures for Physicals. (See “FUTURES EXCHANGE.”) EIA – Energy Information Agency. An agency of the Department of Energy which provides official energy statistics from the US government. EIA publishes weekly inventories  2011 Grain Service Corporation Version 11

23 of crude oil, gasoline, and distillates, for example, numbers followed closely by energy traders. Reference: http://www.eia.doe.gov/ EISA – Energy Independence and Security Act of 2007. (See: “RENEWABLE FUELS STANDARD 2.”) EISA mandates the use of 36 billion gallons of renewable fuel by 2022 and established four categories of renewable fuels with separate volumes and mandates. EL NINO - A warming of the ocean surface off the western coast of South America, occurring cyclically and which has important consequences for weather and climate around the world. (Source: NOAA) (See “La Nina.”) Reference: http://www.elnino.noaa.gov ELEVATION - Refers to the handling margin available to an elevator; the difference between the cost of grain delivered to the elevator and the best price available for grain immediately loaded out of the elevator. ETHANOL - An alternative fuel for internal combustion engines. A product of corn processing. (See “RFG” and “MTBE.”) Ethanol can be produced from various feedstocks, including brewery waste, cheese whey, and the largest - corn. Ethanol is distilled from dry milling or wet milling processes. Dry-milling produces DDGs and CO2 as byproducts; wet-milling byproducts can include corn gluten feed, corn gluten meal, highfructose corn syrup and CO2. Production of ethanol is currently nearly 50/50 between dry and wet milling. (See also “DDGs”, “Dry milling” and “Wet milling.”) Reference: http://www.ethanolrfa.org (ethanol, renewable fuels) EU (also EU 15) The European Union previously known as the European Community (“EC”) is an institutional framework for the construction of a united Europe. It was created after World War II to unite the nations of Europe economically. Fifteen countries comprised the EU-15: Spain, Italy, Ireland, the Netherlands, Luxembourg, the UK, Austria, Germany, Finland, Portugal, France, Sweden, Belgium, Denmark, and Greece. Reference: http://www.eurunion.org/ EU 10 - Refers to 10 members of EU that joined in May 2004. EU 25 - Refers to the central EU-15, plus ten countries that joined in May 2004. EU 27 - All member countries as of 2007. Comprised of the EU25 + Bulgaria & Romania that joined in 2007. Year joined 1957 1973 1981 1986 1995 5/1/2004

EU Member Countries Belgium France Germany Italy Luxembourg Netherlands Denmark Ireland UK Greece Portugal Spain Austria Finland Sweden Cyprus Czech Republic Estonia

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Total 6 9 10 12 15 25

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2007

Hungary Malta Bulgaria

Latvia Poland Slovakia Romania

Lithuania Slovenia 27

Reference: http://www.europa.eu/abc/european_countries/index_en.htm EUREX – The world’s leading international commodities and financial futures and derivatives firm, based in Switzerland and Germany. Eurex was created by Deutsche Börse AG and the Swiss Exchange in December 1996 and founded through the merger of DTB Deutsche Terminbörse and SOFFEX (Swiss Options and Financial Futures Exchange). Eurex and the CBOT at one time operated the a/c/e electronic trading platform. Reference: http://www.eurexchange.com EUROPEAN-STYLE OPTIONS – Put and call options which can only be exercised on expiration date. (See also “AMERICAN-STYLE OPTIONS.”) EX (also X) – Literally, of or away from. Refers to a shipping point or area. E.g., “We bought that train ex Tuscola.” EXCHANGE FOR PHYSICALS - (See “FUTURES EXCHANGE.”) EXERCISE - To invoke the rights of a long option position to take a futures position. EXERCISE PRICE - The price level of the futures contract that will result if an option is exercised. (See “STRIKE PRICE.”) EXERCISE VALUE - The amount of immediate potential gain if an option owner exercises an option into a futures position at the option’s strike price. E.g., “I own a Dec 2.60 call, and Dec futures closed today at $2.83. That call has 23¢ of exercise value, but the total option premium is 28¢.” EXTRA HEAVY - A special grade for oats having a test weight of 40 lbs. or higher. (Heavy oats have a test weight of 38 lbs., but less than 40.) EXTRINSIC VALUE - (Also known as “time” value.) That part of any option premium that is not exercise value. E.g., “The Dec 2.80 call closed today at 18¢; 12¢ was exercise value, so it’s extrinsic value is 6¢/bu.” (See “EXERCISE VALUE.”) EXTRUDE - The physical process of extracting oil and other products from oilseeds. FAIR ACT of 1996 – Federal Agricultural Improvement and Reform Act - The Farm Bill of 1996. The Act removed most planting restrictions, authorized enrollment in Production Flexibility Contracts for payment benefit purposes, authorized changes in the crop insurance programs, and set marketing loan rates. The key provisions are described in Title I, the Agricultural Marketing Transition Act. Reference: http://www.ers.usda.gov/FarmBill/ A PDF copy of the 1996 Fair Act is located at this site.  2011 Grain Service Corporation Version 11

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FAO Food and Agriculture Organization of the United Nations. This organization leads UN efforts to defeat world hunger, serving as a neutral forum where countries meet to negotiate agreements and discuss policy. Reference: http://www.fao.org FARM BILL 1996 (See “FAIR Act of 1996.”) FARM BILL 2002 – Farm Security and Rural Investment Act of 2002, signed into law on May 13, 2002 by Pres. George W. Bush. This bill replaced Production Flexibility Contracts and annual PFC payments with Fixed Direct Payments and Counter-Cyclical Payment provisions. Covers crop years 2002-2007. (See also "FIXED DIRECT" and "COUNTERCYCLICAL.") Reference: http://www.ers.usda.gov/Features/farmbill/ FARM BILL 2008 – See “2008 Farm Bill.” FARMER OWNED RESERVE – (See “FOR.”) FCIC – Federal Crop Insurance Corporation. Reference: http://www.rma.usda.gov/fcic/ FEED GRAINS - Grains used in animal feed. Includes the coarse grains, corn, milo (sorghum), barley, and oats, as well as rye. (See “COARSE GRAINS.”) FEEDSTOCK(S) – Generally used in reference to materials used for the manufacture of biofuels. Biomass feedstock is the organic materials used in the production of biofuels, for example. Corn is a feedstock for ethanol, soybean oil is a feedstock for biodiesel, switchgrass is a cellulosic feedstock for the production of ethanol. FFV – “Flexible-fueled vehicle.” Designed to operate on either blends of up to 85% denatured alcohol (“E-85”), 100% gasoline, or any combination of those. (Source: ` http://www.ethanolrfa.org FGIS - Federal Grain Inspection Service of USDA's Grain Inspection, Packers and Stockyards Administration. Provides inspection and weighing and related services on grains, pulses, oilseeds, processed and graded commodities. (See “OFFICIAL INSPECTION.”) Reference: http://www.gipsa.usda.gov Reference: (GIPSA/FGIS handbooks) http://www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=lr&topic=hb “FILL OR KILL” – In futures/options open outcry trading, a customer order that must be filled immediately or canceled. (CBOT Glossary)

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26 FINDLAY – Referred to a legislative amendment from the early 90’s that granted the Secretary of USDA discretionary authority to cut farm program loan rates by up to 20%. Superceded by loan rate language contained in the FAIR Act of 1996. FINES - Often used generically to refer to screenings of any type. In some grains (E.g., oats), “fine seeds” may be noted as part of the grade. (See “SCREENINGS.”) FIRM - (1) A bid or offer not subject to reconfirmation before acceptance. Usually for a specified time period. E.g., “Ten minutes ago, we offered him 100 corn at +32 Z, firm for 15 minutes.” (2) A term used to describe a strong or rising basis. E.g., “KC rail bids are up 8¢ in the past week; things are really firm due to light farmer selling.” FIRST HALF –(of a month) The 1st through the 15th, inclusive, including February. (Reference NGFA Trade Rule 18) FIRST NOTICE DAY – (CBOT, KCBT, MGE) The first day on which a notice of intent to deliver a commodity or shipping certificate to fulfill a (short) futures contract can be made by the clearinghouse to a buyer (long). Sellers (shorts) can first give notice of intent to deliver to the clearing corporation on the day before First Notice Day. These notices are then processed overnight, and passed on FND to the oldest longs in the nearby futures month. First notice day in grain and soybean futures is the last business day of the month preceding a futures delivery month. E.g., “First notice day for December corn is the last business day of November.” (FIXED) DIRECT PAYMENT(s) – Now more commonly referred to simply as “Direct Payments.” Provision of the 2002 and 2008 Farm Bills that replace the Production Flexibility Contract payments of the 1996 Farm Bill. Payments are made at rates set in the Farm Bill and made on a producer's program base acres X 85% X program yield from 1996. Direct payments are not tied to a farm's production crop or yield. (Note: The 2002 Farm Bill provided for updating yields, but only for countercyclical payments.) (See also "Countercyclical payments.") Reference: http://www.ers.usda.gov/Features/farmbill/analysis/DirectPayments2002act.htm (note: this link has a side by side comparison of 2002 and 2008 Farm Bills) FLAT PRICE - Refers to the $/¢ price of cash grain rather than to the basis. E.g., “I sold 15,000 bushels ‘flat’ this morning at $2.83 before the market opened.” It also refers to unhedged cash grain position risks. E.g., “Most of the risk of flat price grain trading is associated with futures price movements.” FLEXIBLE-FUEL VEHICLES – Specially designed vehicles that can operate on multiple blend fuels, including E85 ethanol. Specially designed components adjust the engine's timing and air/fuel mix, depending on the fuel. Reference: http://www.fueleconomy.gov/feg/flextech.shtml FLOOD STAGE – The height of a river above which damage begins to occur. Normally the level at which a river overflows its banks.  2011 Grain Service Corporation Version 11

27 FLOOR BROKER - A broker on the floor of a futures exchange who executes orders for others. FLOOR TRADER - One who trades for his/her own account on the floor of a futures exchange. (See “LOCAL.”) FM - Foreign material. A grading term referring to non-grain material in the grain. Sometimes combined with broken grain, as in corn. (See “BC/FM.”) FM is the material that passes through a 6/64 round hole sieve used in accordance with FGIS procedures on corn, and a 5/64 triangular hole sieve on milo. Soybean FM is the matter that passes through an 8/64 round hole sieve and all other matter other than soybeans remaining in the sieved sample. FM in wheat is all matter that remains in the sample after removal of dockage. (See “DOCKAGE.”) FMD – Acronym for “Foot and mouth disease.” Foot-and-mouth disease (FMD) is a highly contagious viral disease of cloven-hoofed animals. The disease is characterized by the formation of fluid-filled blisters and erosions in the mouth, nose, teats and feet. Although rarely lethal in adult animals, it causes serious production losses and is a major constraint in international trade. There is no known cure. In the US it is more commonly known as “Hoof and Mouth Disease.” Reference: http://www.aphis.usda.gov/publications/animal_health/content/printable_versio n/fs_foot_mouth_disease07.pdf FOB - Free on Board. This means that the selling price includes loading out without additional charges. Also used to specify the geographic point vs. which price is determined. See “BASIS (FREIGHTS).”) In some markets, “FOB” is used to refer to shipping points, and “delivered” or “CIF” is used to refer to receiving points. E.g., “Elevations at Gulf elevators are the difference between the cost of barge grain, CIF the Gulf, and the price at which it can be sold FOB vessel.” F.O.R. - Farmer Owned Reserve. A USDA program whereby eligible producers could enroll certain quantities of approved commodities into a “Reserve” for up to a USDA defined time period. The producer retained title, but USDA paid storage in certain circumstances, and waived interest charges if open market values were below specified levels. The FOR concept was designed to help isolate excess stocks from the marketplace in an effort to manage supply and attempt to support prices. In effect, the FOR was an extension of the regular 9-month price support loans, as the commodity could be removed at any time by the producer. Any authority for an FOR was suspended through 2002 under the FAIR (Farm Bill) Act of 1996. FORCE MAJEURE - Literally, a superior or irresistible force. With respect to contracts, it refers to events or effects that cannot be reasonably anticipated or controlled (i.e., wars, hurricanes), and which therefore should excuse non-performance. Generally, the grain trade is not receptive to force majeure arguments except when specifically noted and agreed to. E.g., “In rail grain trading, a general railroad strike would be accepted as justifying force majeure; a car shortage would not.”

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28 FORWARD CONTRACT - A cash grain contract calling for shipment in the future. Used often to refer to purchases from farmers. E.g., “Some farmers make it a practice to forward contract a portion of their expected production at planting time.” FREE ON BOARD – (See “FOB.”) FREE TIME - The time allowed by the governing contract or tariff to load or unload a shipment without incurring demurrage or penalties. FREIGHT BASIS - (See “BASIS (FREIGHTS).”) FREIGHT SPREAD - The difference between the freight from (to) the actual origin (destination) and the freight from (to) some other freight basing point. E.g., “If the train rate from Columbus to a mill in the South is 42 cents and the rate from your elevator is 47 cents, your freight spread vs Columbus to that mill is +5 cents.” FSA – Farm Service Agency (See ASCS). Formerly Agricultural Stabilization and Conservation Service. The USDA agency, formed in 1995, that combined ASCS and other agencies. Administers farm programs and services, including: 9-month loans, farm program enrollment, etc. Reference: http://www.fsa.usda.gov/pas/default.asp FSU - common abbreviation for “Former Soviet Union.” FULL CARRY (delivery markets utilizing warehouse receipts) - A futures market where the price difference between delivery months reflects the total costs of insurance and ‘storage’. The amount by which a deferred futures month must trade over a nearby month to make it economically feasible to take delivery via the nearby contract, hold the grain, and deliver against the deferred. E.g., “If storage in Chicago is 5.0 cents per month, the cost to carry between the December and March corn futures is around 15 cents.” ‘Full carry’ also includes a return to money. E.g., “full carrying costs are 15 cents, but Full Carry will be wide enough to return 3% to an investor.” FULL CARRY – (in a delivery market utilizing shipping certificates) - A futures market where the price difference between delivery months reflects the total costs of “premium charges.” The amount by which a deferred futures month must trade over a nearby month to make it economically feasible to take delivery via the nearby contract, hold the shipping certificate, and deliver against the deferred. E.g., “If the premium charge on the IWDS is $.0015/bu/day, full carry between the December and March futures is around 15¢, plus a return equivalent to 3%.” 15¢ + 3¢ (interest return) = 18¢ Note: the CBOT/CME changed storage rates for wheat shipping certificates in 2009; see “VSR.” FULL CARRY (country) - What it costs a county elevator to own grain over time. Should equal interest cost, plus insurance and miscellaneous costs associated with storage, plus some allowance for quality risk and shrinkage.

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29 FUMONISINS – mycotoxin produced by Fusarium fungi; associated with neurologicial diseases, pulmonary edema, in farm animals, and some carcinogenesis in laboratory animals. Another mycotoxin from Fusarium fungi is vomitoxin. (See “Vomitoxin” and “Fusarium.”) Can develop in drought-stressed crops, especially if subjected to humidity. FDA guidance levels are available at the second link listed below. Reference: http://www.fda.gov/AnimalVeterinary/Products/AnimalFoodFeeds/Contaminant s/ucm050311.htm Reference:http://www.oardc.ohiostate.edu/ohiofieldcropdisease/Mycotoxins/mycopagefumonisin.htm FUNGIBILITY – (Also known as “DIRECTED FUNGIBILITY”) A program initiated by the CBOT in September 2006 enabling market participants holding opposite positions in mini-sized and full-sized futures contracts in the proper ratio, and the same contract month, contract year, and account to request, through their clearing firm, the offset of these positions. Firms must enter a Request for Offset “RFO” through CBOT Clearing Services. The offset may be effected only if a matching and opposite request is available from one or more other parties. Partial matching is a possibility. An “RFO” will remain in Clearing until matched, removed or at 2 days prior to contract expiration. FUNGIBLE - Interchangeable. Grain is a fungible commodity because two lots of equal size and quality are equally acceptable in trade. To warehouse operators, this means that grain does not have to be segregated by owner. FUSARIUM(S) – Class of fungi that can produce certain mycotoxins that affect livestock and/or humans. Fumonisins and vomitoxin are two commonly known mycotoxins. Fusariums cause ear rot in corn, and head blight and scab in wheat. Reference: http://en.wikipedia.org/wiki/Fusarium FUTURES - Contracts for delivery of commodities at a later time, traded on organized exchanges. All contract terms except price are standardized, allowing easy offset. FUTURES EXCHANGE - (also known as “exchange for physicals,” “versus cash,” or “futures exchange versus cash.”) A method of pricing an unpriced grain contract, in which the cash grain buyer gives the seller a long futures position in exchange for the cash grain position. These transactions take place outside the trading pit and are therefore also called “ex pit” transactions. The mechanism allows both parties to accomplish pricing without the risk of getting out of position. E.g., “We sold the grain at +10 and exchanged futures at $2.80, so the cash price will be $2.90.” Also, an organized market for trading futures, such as the CBOT. FUTURES ONLY - Cash market forward contracts whereby the futures price level is fixed, but the basis is not. (See also “HEDGE TO ARRIVE.”)

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30 FUTURES REFERENCE PRICE – Term used in some cash grain contracts to indicate a specific exchange-traded futures contract/month, or the value of such, that is a factor in determining the final price of the cash contract. Sometimes used in “Futures Only” (Hedge to Arrive) contracts, or Minimum Price Contracts. E.g., “The Futures Reference Price on that new-crop HTA of his is $2.60 CBT Dec. He has to fix the basis before October.” G8 – Economic organization comprised of leading global financial powers. Member countries include Canada, France, Germany, Italy, Japan, Russia, the United States and the United Kingdom. G11 - Broader economic organization of the G8 plus: Belgium, the Netherlands, Sweden and Switzerland. GAMMA - A mathematical factor that indicates how fast the delta of an option changes, given a specific change in the underlying futures price. (See “DELTA.”) GASC – Acronym for “General Authority for Supply Commodities”, the Egyptian state agency for buying feed and foodstuffs. GATT - General Agreement on Tariffs and Trade. A treaty on trade among a number of nations (which do not have centrally planned economies) with the objective of promoting freer trade. GATT was succeeded by the World Trade Organization, WTO. (See “WTO”.) GAUGE HEIGHT – A vertical measuring device to determine the height of a river above its bottom or some fixed point. Height of water surface above an established datum plane. Gauge height is often used interchangeably with the term “Stage.” Gauge height is more appropriate when referring to a specific measurement. E.g., “The river at St Louis was 4 feet on the gauge today at 8 a.m.” (See “STAGE.”) GCAU - Grain Consuming Animal Unit. Term used to standardize feed consumptive animals and poultry. Used by USDA to aid in predicting and measuring feed disappearance. USDA now refers to “Roughage Consuming Animal Units”, RCAU. Per USDA: “Refers to livestock and poultry numbers weighted by all concentrates consumed via an indexing procedure. This indexing procedure converts livestock and poultry numbers into a common unit called ‘animal units’ based on the feed consumed by one dairy cow in the 1969-71 feeding years.”

Reference: http://www.ers.usda.gov/Data/FeedGrains/CustomQuery/Default.aspx (type “Animal Unit Indexes” in the Group field, then wait briefly) GCC - Greenhaven Continuous Commodity Index. An equal-weight index ETF on a basket of 17 commodities, giving equal dollar exposure to livestock, grains, softs, and energy. Reference: http://www.greenhavenfunds.com/ Reference: http://www.greenhavenfunds.com/bios.asp

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31 GHG – Acronym for “Green House Gas.” EPA refers to GHG as gases that trap heat in the atmosphere. GHG include carbon dioxide, methane, nitrous oxide and fluoridated gases (including hydrofluorocarbons). GIPSA – Grain Inspection, Packers, and Stockyard Administration. Agency of USDA. Reference: http://www.gipsa.usda.gov ‘GIVES’ - (verb) As in a futures exchange, when the grain buyer gives futures to the grain seller. (noun) Unpriced basis purchases are often called ‘gives’, because the buyer will “giveup” futures in an exchange. E.g., “We have 500,000 bushels rail grain bought for next month at +5 CH; that’s 500 ‘gives’ in our position until we exchange futures with the seller to fix the price.” (See “TAKES.”) GLOBEX – Electronic trading platform operated by the Chicago Mercantile Exchange (CME). Globex replaced the prior e-cbot electronic platform after the CME/CBOT merger. Corn, soybeans, wheat, oats, KC and Minneapolis wheat are all offered on this platform for daytime and overnight trading. (The CBOT offers products from other exchanges through licensing agreements.) Effective August 1, 2006, “side by side” trading took effect in these agricultural commodities, offering electronic or pitexecution of orders in full-size futures contracts. Electronic trading shifted to the CME Group GLOBEX platform in 2008. Reference: http://www.cme.com/trading/get/abt/ GLUTEN FEED (Corn) - Byproduct of corn wet milling processing. That part of the kernel that remains after most of the starch and germ is extracted. Used in livestock feeding. Corn gluten meal is gluten feed without bran and is a 19 percent minimum protein product. Available as regular feed and flake product. Reference: http://www.ingredients101.com/cgf.htm GMO – Genetically modified organism(s). GMOs incorporate genes from another plant species, an animal, a bacterium, or a virus. Although this represents a significant change from conventional plant breeding, the genetic code is universal, and even distantly related species share a large proportion of their genes. GOLDMAN ROLL – Colloquial term which describes the program under which the Goldman Sachs Commodity Index fund or any other index fund moves, or ‘rolls’, its long futures positions forward to the next sequential futures month. The GSCI outlines, specifically, the percentage of holdings to be rolled daily as well as the timing of such rolls. Traders know this program’s timing and watch for the activity as a potential market factor. GOLDMAN SACHS See GSCI. ‘GOOD FUNDS’ - A form of payment that will allow immediate bank credit. Interbank wire transfers are the most common form of good funds. E.g., “The exporters will pay immediately in good funds, but the feed lots want to mail a check.”

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32 GOVERNMENT TENDER - Government purchasing agencies often buy items/commodities in a process known as a tender. Potential sellers are informed of the buyer’s needs (amount, grade specifications, shipment times, warrants, etc.) and are invited to submit firm offers by a certain time (E.g., 4:00 P.M. New York time). These will be accepted or rejected by a later time (E.g., 9:30 A.M. the following morning). In theory at least, there is little negotiation, and no exporter gets first refusal on the business at another’s price. GRAIN CONSUMING ANIMAL UNIT - See (“GCAU.”) GREENHOUSE GAS – (See “GHG.”) GROATS – Dehulled and crushed grains of oats, barley or wheat. (See also “bulger wheat.”) “GROCERY BOAT” – A colloquial term in export trading; refers to shipments, often from the US to Rotterdam, containing multiple commodities segregated by holds. GROSS – The weight of a shipment that includes the cargo and the weight of the vehicle. (E.g., “That railcar’s weight was 265,000 pounds gross, and held 175,000 pounds of corn.”) (See also “TARE” and “NET.”) GROUP RISK POLICY (See "GRP.") GRP– Group Risk Policy, one yield-based type of federally subsidized crop insurance coverage. GRP payments are determined based on a county yield index rather than an individual producer's yield. (See also "MPCI.") Reference: http://www.rma.usda.gov/policies/#grp GSCI - The Goldman Sachs Commodity Index. “The GSCI is designed to provide investors with a reliable and publicly available benchmark for investment performance in the commodity markets comparable to the S&P 500 or FT equity indices. As such, the GSCI is a composite index of commodity sector returns, representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities.” (Quote from: www.gs.com/gsci ) GSCI futures are traded at the Chicago Mercantile Exchange. Reference: http://www.cme.com/trading/prd/ag/gsci.html Reference: http://www2.goldmansachs.com/gsci/ GSM – The export credit guarantee programs administered by Commodity Credit Corporation (CCC). The GSM102 program covers credit terms up to 3 years, and GSM 103 (Intermediate Export Credit Guarantee) covers credit terms up to 10 years. Reference: http://www.fas.usda.gov/excredits/exp-cred-guar-new.asp GTC - (Good ‘til canceled.) Usually refers to a futures order which remains in effect until filled or canceled. GULF - U.S. ports on the Gulf of Mexico. Often used to refer to the New Orleans area, the Center Gulf.  2011 Grain Service Corporation Version 11

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H5N1 – Highly pathogenic variation of avian influenza, and the one of greatest concern for human health. Not all H5 variations are highly pathogenic, however. Human and avian mortality are very high from H5N1 with a very short incubation period. Transmission to humans remains largely through direct contact with infected poultry according to the World Health Organization and the CDC. Reference: http://www.who.int/csr/disease/avian_influenza/en/ Reference: http://www.who.int/csr/disease/avian_influenza/avianinfluenza_factsheetJan20 06/en/index.html Reference: http://www.who.int/csr/disease/avian_influenza/Timeline_28_10a.pdf HARD AMBER DURUM – Durum wheat with 75% or more of hard and vitreous kernels of amber color. Reference: http://archive.gipsa.usda.gov/reference-library/standards/810wheat.pdf (note: this web link includes all other classes of wheat) HARD WHITE WHEAT - A subclass of White wheat. Other subclasses include Soft White wheat, White Club wheat, and Western White wheat. (See “HWW, “SWW,” “WHEAT.”) HEAT DAMAGE – FGIS grade factor. Kernels and pieces of corn kernels that are materially discolored and damaged by heat. HEAVY OATS - A grading factor used for oats that are at least 38 lbs., but less than 40 lbs. test weight. HECTARE - A metric measurement of land area equal to 2.471 (U.S.) acres, or 100 (metric) acres, same as 10,000 square meters. HEDGE - A transaction intended to reduce risk. Often refers to taking a futures position that is equal and opposite from one’s position in the cash market. HEDGE FUNDS – A lightly-regulated sector of investments that utilize a wide array of strategies to seek high returns; may or may not involve significant leverage. “Hedge” funds do not hold equal and opposite positions in cash and futures. Prior to 2004/05, generally considered to be suitable only for the largest investors; now available to a broader class of investment money. Reference: http://www.thehfa.org/ HEDGE(D) TO ARRIVE - (Also see “FUTURES ONLY.”) Cash market forward contracts, in which the futures price has been fixed in the contract, but not the basis. Therefore the final cash price is not fixed until a later point in time. HFCS – High fructose corn syrup. (See "HIGH FRUCTOSE CORN SYRUP.")

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34 HIGH FRUCTOSE CORN SYRUP - A product of wet corn milling. Among other uses, HFCS is commonly used in place of sugar as a soft drink sweetener. Reference: http://www.hfcsfacts.com/ “HIGH-PRO” - Refers to the protein level of wheat. High protein is wheat with protein of 11% of higher. ( See “ORDINARY,” or “ORDS.”) HOG/CORN RATIO The ratio of the market hog price divided by the price of corn in dollars per bushel. This shows the number of bushels of corn it takes to equal the value of 100# of live hogs. E.g. $60/$3.50 = 17.14 ratio Historically, when the ratio goes above 20, production would expand with a time lag of slightly over one year. HORIZONTAL SPREAD - In options trading, a spread between options of the same class (E.g., calls) but with a different expiration. Sometimes referred to as a calendar spread. E.g., “Long May 6.00 Puts and short July 6.00 Puts is a horizontal spread.” Strike prices may be the same or different. (See “CALENDAR SPREAD.”) HRS - Hard Red Spring. A class of wheat. Contains the highest percentage of protein. Has superior milling characteristics, and is an excellent bread wheat. Grown primarily in the Dakotas, Montana, and Minnesota. Subclasses of HRS include Dark Northern Spring, Northern Spring, and Red Spring wheats. (See “WHEAT,” “DNS,” “NS.”) Reference: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/spring_wheat.pdf HRW - Hard Red Winter. A class of wheat. Produced primarily in the Great Plains and the Southwest. Used to produce bread, and in some cases, sweet goods. Used to produce all-purpose flour. The dominant class of wheat in U.S. production and exports. There are no subclasses of HRW wheat. (See “WHEAT.”) Reference: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/winter_wheat.pdf HWW - Hard White wheat. A subclass of White wheat. Used mainly in hard rolls, yeast breads, and noodles. Closely related to red wheats, with similar milling and baking properties. HWW contains 75% or more of hard kernels. (See “WHEAT,” “SWW.”) IB (See “INTRODUCING BROKER.”) I.C.E. – Intercontinental Exchange® (NYSE: ICE) operates the leading global, electronic marketplace for trading both futures and OTC energy contracts, and the leading soft commodities exchange. (Quote: ICE website) Reference: https://www.theice.com/homepage.jhtml IDK – Insect-damaged kernels. A grading factor for wheat; classed as “damage.” Insectdamaged kernels are kernels bored or tunneled by insects.

IGC – Acronym for International Grains Council. The International Grains Council (IGC) is an intergovernmental organization concerned with grains trade. It administers the Grains Trade Convention, 1995. Based in London since 1949, IGC also services the Food Aid Committee, established under the Food Aid Convention 1999. Many of its  2011 Grain Service Corporation Version 11

35 information services are made available to subscribers. Reference: http://www.igc.org.uk ILLINOIS WATERWAY DELIVERY SYSTEM – Commonly referred to as the IWDS. The system implemented in year 2000 for delivery against Chicago Board of Trade corn and soybean futures contracts. Includes a 204 mile section of the Illinois River from Chicago/Burns Harbor to Pekin, IL on corn, and the 403 mile section south to St. Louis, MO on soybeans. Delivery is by shipping certificates. ( See “Shipping Certificates.”) Reference: http://www.cbot.com (regulations) IMMEDIATE - Shipment within 3 days. Reference NGFA Grain Trade Rule 18. INCOME PROTECTION – Full name for "IP", a type of revenue-based federally-subsidized crop insurance. (See "IP", and "CRC.") Reference: http://www.rma.usda.gov/policies (scroll down to IP) INDEX FUNDS – An index fund can be defined as a mutual fund or exchange-traded fund (ETF) with a clearly-defined set of rules of ownership, that is held constant regardless of market conditions. The fund does not have to follow a well-known index. Source: www.indexfunds.com Index funds can own commodities or stocks, and will only trade from the long side. In commodity futures, “index fund” positions are categorized under “commercial” position rather than “speculative” in CFTC’s Commitment of Traders reports. A CFTC supplemental Index Funds report now shows these positions separately. Index fund trading is generally considered to be ‘passive’ buying when additional investment money moves into the fund and only infrequently shifting ownership among varying sectors or individual stocks or commodities. See also “GSCI” (Goldman Sachs Commodity Index). Reference: http://www.sec.gov/answers/indexf.htm Reference: http://www.indexfunds.com Reference: http://www.cftc.gov/cftc/cftccotreports.htm?from=home&page=cotcurrentconte nt#CurrentReports (See Supplemental Commodity Index report) IN THE MONEY - An option with exercise value, E.g., “A call at $2.00 is ‘in the money’ $.50 if the futures market is trading at $2.50.” (See “EXERCISE VALUE.”) IN THE RIVER - Exports loaded in the Center Gulf area. (See “CENTER GULF.”) INTERCOMMODITY SPREAD - To buy a given delivery month of one futures market and simultaneously sell a delivery month of a different, but related, futures contract. E.g., “I bought 50 Dec CBOT corn and sold 50 CBOT Dec oats today.” INTERMARKET SPREAD - To buy a given futures (or option) contract month and simultaneously sell a futures (or option) contract on a different exchange. E.g., “I bought 50 Dec CBOT wheat and sold 50 Dec KC wheat today.”

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36 INTERMODAL - Using a common container but different modes of transportation to move goods. Shipping a container of a specialty grain from the U.S. interior to the Gulf by rail and from there to a foreign country by ship would be intermodal transportation. (See also “CONTAINERIZED SHIPMENTS.”) INTERVENTION; INTERVENTION STOCKS – An EU term related to their subsidy/support programs. The support price is known as the “intervention” price; a concept comparable to US loan rates. Intervention stocks refers to government (grain) stocks purchased from producers. EU producers have 3 options: 1) use or store the grain on farm, 2) sell the grain to intervention agencies at a guaranteed floor (intervention) price, or 3) sell the grain on the domestic market at the prevailing EU market price. (See “Restitution” and “Agenda 2000.”) Grain purchased from I.S. is awarded after competitive bidding. In some circumstances, fixed subsidies (Common Right Restitution) are available to exporters of intervention stocks going to specific destinations. These subsidies are also available for open market grain going to the same destination(s). INTRAMARKET SPREAD – To buy one futures (or options) contract and sell a different month of the same commodity on the same futures exchange. An example of an intramarket wheat spread would be: Buy 2 September 09 CBT wheat/ Sell 2 December 09 CBT wheat at 15 cents premium December. (See also “INTERMARKET SPREAD”.) INTRINSIC VALUE - (See “EXERCISE VALUE.”) The amount by which an option is in the money. Ex: “Dec futures are $3.83, a Dec 360 call has 23¢ intrinsic value.” INTRODUCING BROKER “IB” – A futures regulatory classification denoting a firm or person that is authorized to accept and handle futures/options orders, but not to accept or handle customer segregated funds. An IB will be affiliated with a Futures Clearing Merchant firm that is authorized to accept customer funds. INVERSE - A market in which nearby values are higher than deferred ones. Can refer to basis, futures, freight, and futures spreads. Also “inverted.” IP - Identity preserved. A term used to denote commodities, often specialty crops, handled to keep them separate from items of a different or even similar quality. High-lysine corn and waxy maize are just two examples of specialty crops grown and often handled in this fashion. Certain wheats are traded “identity preserved” at times due to their special or unusual characteristics (for baking, milling, etc.) IP "Income Protection" a type of federally subsidized revenue-based crop insurance. Protects producers against reductions in gross income when either a crop's price or yield declines from early season expectations. (See also "CRC" and "RA.") Reference: http://www.rma.usda.gov/policies/#grp IWDS – (See “ILLINOIS WATERWAY DELIVERY SYSTEM.”)  2011 Grain Service Corporation Version 11

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JATROPHA – An invasive, poisonous (to humans/animals) shrub that grows in dry, rugged climates, including South Africa and India. Jatropha shows great promise because its oily seeds (approx 55% oil) can be refined for biodiesel. These 5-10 foot tree/shrubs require less than 20” per year of precipitation and can grow in marginal soil. It shows promise for biodiesel production as Jatropha does not compete for water resources and can be grown where soybeans or corn cannot. Optimal yields are around 5 tons per acre. India is exploring expansion of this crop for biodiesel. Reference: http://en.wikipedia.org/wiki/Jatropha JFM - January-February-March. A common trading time slot in some markets. E.g., “We sold 3 units/week J/F/M into the Southeast.” JJ - June/July. A common trading time slot in some markets. JJA – June/July/August. Used to be a common trading time slot in some markets. JONES ACT (of 1920) – The 1920 Federal Act requiring that vessels transporting cargo between US ports be US flag vessels, manned by a US crew, and owned by a US person or entity. (Officially, the legislation was the Merchant Marine Act of 1920.) Jones Act vessels are more costly to operate than foreign flag vessels, and US port to port vessel volume is low as a result. JUMBO BARGE - A large barge. (Not an ocean-going barge.) (See “BARGE.”) Typically these are used for grain shipments on the Mississippi from elevators south of the locks to the Gulf. If draft is not a limitation, some jumbos may be loaded with up to 2,400 tons (approximately 85,000 bushels of corn). JUMBO HOPPER - A railroad hopper car with more than 4,750 cubic feet capacity. Typical jumbo hoppers are around 5,200 cubic feet and carry around 110 short tons. KARNAL BUNT – Also known as partial bunt. A fungal disease of wheat, durum wheat, and triticale. USDA regulates wheat infected with Karnal bunt and restricts the wheat’s movement to retain export markets that consider Karnal bunt a pest of quarantine significance and to keep the fungus from spreading. Reference: http://www.aphis.usda.gov/lpa/pubs/fsheet_faq_notice/fsfaqnot_planthealth.html KCBOT - Kansas City Board of Trade, also known as “KCBT.” Reference: http://www.kcbt.com/ KC WHEAT STORAGE RATE - Effective with the September 2011 KC HRW contract, storage rates on futures delivery warehouse receipts will rise, and vomitoxin will be limited to 2 ppm. A minimum 11% protein will also apply. Reference: http://www.kcbt.com/news_2.asp?id=832 LA NINA – A cyclical oceanic occurrence characterized by unusually cold ocean temperatures in the equatorial Pacific. Literally, "The little girl." Opposite of El Nino. (See “El  2011 Grain Service Corporation Version 11 Rev

38 Nino” and “NOAA.”) Reference: http://www.pmel.noaa.gov/tao/elnino/la-nina-story.html LAKE OFFICE - The almost mythical headquarters of Cargill Inc., located on Lake Minnetonka near Minneapolis, Minnesota. LAKER - A vessel built for use on the Great Lakes. In the grain trade, used primarily to move grain to the elevators in the St. Lawrence for loading into ocean-going vessels. E.g., “The availability and price of Laker freight will play a large part in determining how much corn leaves Chicago next spring.” (See “SALTY.”) LAST HALF - The 16th through the last day of a month, inclusive. (NGFA Trade Rule 18.) LAWRENCE - The St. Lawrence Seaway. Used to refer to shipping origins along the deep water ports on the St. Lawrence River in Canada. Often grain from the Great Lakes is stored and transshipped through elevators on the St. Lawrence. (See “SAINT LAWRENCE.,” and “BAIE-COMEAU.”) Reference: http://www.greatlakes-seaway.com/en/home.html LC - (See “LETTER OF CREDIT.”) LDP - (See “LOAN DEFICIENCY PAYMENT.”) LETTER OF CREDIT - A financial arrangement whereby a bank guarantees to make payment if specific conditions are met. In the grain trade, an LC can be used to guarantee payment for shipments or be used as a performance bond. Most traders insist on LCs which are “irrevocable” once opened. E.g., “We reached an agreement with that buyer to ship him open against a $500,000 standby LC.” The two kinds of LCs are: a) irrevocable - assuming all documents are properly presented, bank may not cancel the credit without the agreement of the recipient b) revocable - bank may revoke credit or change the terms without consent. Reference: http://www.expertlaw.com/library/finance/letter_of_credit.html LIEN - A security interest used to secure a debt. In grain, a bank may take a lien on a growing crop (thus, a crop lien) to secure a loan to the grower. LIQUID(ITY) – A descriptive measure of a commodity or other market with enough outstanding open positions to allow large transactions without a substantial change in price. (CBOT glossary). Open interest statistics are a measure of liquidity. LOAD-OUT CHARGE – Warehousing term referring to the charge a person or firm pays to a storing warehouse for loading out grain to a buyer. Commonly used in reference to delivery load-outs against futures contracts at the CBOT, KCBT, or MGE. (See “PREMIUM TO FUTURES.”)

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39 LOAN DEFICIENCY PAYMENT (LDP) - The benefit amount certain producers are entitled to from USDA one-time per crop year; equal to the localized loan rate of that commodity on an eligible date chosen by the producer less the prevailing market price of the eligible farm-program commodity. (Only applies if current market value is below the USDA Marketing Loan Rate.) The only producers eligible for an LDP are ‘enrolled’ producers who do not take out a 9-month loan from USDA for their crop. Other restrictions apply. (See “BENEFICIAL INTEREST.”) Reference: http://www.fsa.usda.gov/pas/publications/facts/html/nonrec98.htm LOCAL (futures trading) - A floor trader in the futures market who typically tries to capture small price moves, and who doesn’t usually carry positions overnight (See “SCALPER.”) LOCAL (railroads) - An AAR (American Association of Railroads) term used to classify part of the nation’s non-Class I rail carriers. Local railroads are line-haul carriers that fall below the Regional line criteria of 350 miles of road and/or revenue between $40 million and $266 million. (See “REGIONAL.”) Switching and terminal railroads, those carriers engaged primarily in providing switching and/or terminal services on behalf of other railroads, are included in the Local category. (Also see “CLASS I.”) LOCK - Two pairs of gates in a canal, forming an enclosure allowing barges or vessels in the canal to be raised or lowered to different water levels. Locks on the Mississippi River are numbered, starting with #1 at Minneapolis, and ending with #27 at Granite City, Illinois. E.g., “Lock and Dam #26 at Alton, IL is down again and barge traffic is backing up on both sides of the Lock.” Reference: http://www2.mvr.usace.army.mil/NIC2/default.cfm Reference: http://www.ribb.com/index.php LOCK THROUGH - To pass through a lock on a waterway. LOGISTICS - The management and execution of the movement of commodities. E.g., “He sold 2 million bushels for J/F/M; that’ll take some planning to get the logistics arranged.” LONG - To have an ownership position or equivalent price risk in an item. A “long” benefits from price increases and suffers from declines. LONG TON - 2,240 lbs. Seldom-used measure of weight. More often, international trading values are quoted in terms of the metric tonne (2204.6 lb.). LOWER RIVER - The Mississippi River south of Cairo, IL. “MAD COW DISEASE” – (See “BSE.”) MARGIN (futures) - An amount of money deposited by both buyers and sellers of futures contracts and by sellers of options contracts to ensure performance of the terms of the contract. In futures trading, there are two kinds of margins: Initial margin and variation (maintenance) margin. Initial margin is the “good faith” margin deposited  2011 Grain Service Corporation Version 11 Rev

40 when a trade is made, and variation margin reflects the day to day changes in price. E.g., “I put up 10¢ per bushel Initial Margin ($500) when I sold 5,000 bushels of corn. When the market jumped 6¢, my broker called me for $300 variation margin.” MARGIN (bid) - The difference between an operation’s bid and what that same grain can be sold for at the same point in time. Does not necessarily equate to what the operation actually makes for handling grain. E.g., “He tries to bid on a 6¢ margin. But he could sell rail units for -3 CH FOB his elevator, and was bidding -8 CH to farmers, so he’s bidding a 5¢ margin today.” MARGIN (operational) - The actual revenue resulting from purchases of grain and the sale of the same quantity. E.g., “ABC elevator bought 200,000 bushels for October at a weighted average basis of -9 CZ, and sold it for +4 CZ for December, for a gross handling margin of 13¢. Their net margin after interest was 8¢.” MARK TO THE MARKET - To determine the immediate market value of all assets and liabilities. All futures markets use “mark to the market” to determine the daily gains or losses on open futures and options positions for variation margin purposes. Daily “mark to the market” collection and payout in futures protects buyers and sellers against default. Also, one method commonly used in cash grain accounting. MARK TO MARKET – An accounting method that recognizes assets and liabilities at their current fair value. Now required for most derivative and hedging transactions through FASB Statement 133, issued by the Financial Accounting Standards Board (2000). MARKETING LOAN - A 9-month non-recourse loan from the USDA/FSA to eligible producers, whereby the loan is repaid at the lower of (1) a daily published market value, or (2) the principal plus accrued interest. Marketing loans applied on feedgrains, oilseeds, and cotton (excl ELS cotton), under provisions included in the 1996 Farm Bill and continued in the 2002 and 2008 Farm Bills. Reference: http://www.ers.usda.gov/Features/farmbill/titles/titleIcommodities.htm MARKETING LOAN GAIN – Any amount by which a producer repays an FSA Marketing Loan at less than the principal plus interest. MLGs are subject to an overall payment cap under the 2002 and 2008 Farm Bills. MASA – Corn flour (Spanish term). Masa is used in tortillas. MAXIMUM PRICE CONTRACT - A cash grain contract in which the seller agrees there will be a price ceiling but no floor price. The seller uses options to offset the risk. E.g., “We sold them the corn at 10 over, adding the cost of a $2.50 call, which was 5 cents, thus fixing a maximum price of $2.65 on the sale.” MBM - acronym for “meat and bone meal.” Refers to meal feed produced from slaughtered animals. Often heard in conjunction with discussions on “Mad Cow” disease. MBM believed to be an agent for transmission of BSE to healthy animals. (See “BSE.”)

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41 MCE - MidAmerica Commodity Exchange. A former affiliate of the Chicago Board of Trade that specialized in smaller versions of futures contracts traded on other exchanges. (See “Mini-CBOT contracts.”) ME (or MESL) - Merchants Exchange (of St. Louis). MERCHANTS EXCHANGE OF ST. LOUIS Venerable institution where cash CIF corn, beans, wheat and barge freight trading used to be conducted. Founded in 1836, the Merchants’ Exchange is the oldest organized cash commodity market in the United States. This has been replaced with private transactions in cash, and by the Merchants Exchange barge freight futures. MERCOSUR “Southern Cone Common Market” – Formed in the mid/late 80’s, by Brazil & Argentina, followed by Paraguay, Uruguay, Bolivia & Chile, to develop common commercial policies, free trade, and pursue other economic goals. Mercosur grew to be the world's third largest trading bloc. Reference: http://www.mercosurtc.com/ METRIC TONNE - 1000 kilos, or 2,204.6 lbs. The most common unit in global grain trading. Equates to 39.37 bushels of corn, or 36.74 bushels of wheat or soybeans. Common abbreviation is “MT.” E.g., “The exporter offered 200,000 MT wheat at $250/MT. MFN - (Most Favored Nation.) One of the ways the U.S. classifies its trading partners. Having MFN status allows an importer of U.S. goods access to more credit and lower duties. (See “NTR.”) MGE - Minneapolis Grain Exchange. All futures offered by the MGEX are traded on the Globex electronic platform. Pit trading (open outcry) is no longer offered. Reference: http://www.mgex.com “MID-AM” - Common term referring to what used to be the MidAmerica Commodity Exchange. The “Mid Am” was an affiliate of the Chicago Board of Trade, and specialized in small-size versions of contracts traded at the CBOT, Chicago Mercantile Exchange, and others. The CBOT now trades the ‘mini’ contracts on their main exchange and on Globex. MID-BRIDGE - The common pricing point for rail export sales to Mexico. Located at the middle of the bridges across the Rio de Grande at the border crossings. MID MISS - The Mississippi River from Winfield, MO through McGregor, IA. MIDDS - (Middlings) Particles of wheat germ, bran, flour, etc resulting from the milling of wheat. By products of wheat milling containing a maximum 9 1/2% crude fiber. MILLET(S) One of the oldest cultivated crops. Various grass crops whose seeds are used for food or feed. Several varieties of millet are grown in the US with most of the approximately 600,000 acres located in Nebraska, Colorado and the Dakotas. Much of US millet goes into birdseed.  2011 Grain Service Corporation Version 11 Rev

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MILLING QUALITY - Grain that is acceptable to a miller. This is not, by itself, a very specific term. MILO - Another term for yellow grain sorghum. A feed grain crop more commonly raised in dry land areas of the Western Corn Belt and the Southwest. MINI-CBOT CONTRACTS - The 1,000 bushel contracts traded through the CBOT that were formerly traded at the Mid America (“Mid Am”) exchange affiliate of the CBOT. MINIMUM LOAD AGREEMENT (MLA) - A requirement that a barge or vessel be loaded with no less than a certain amount. MINIMUM PRICE (CONTRACT) - (Also MPC’s) A cash grain contract in which the buyer agrees to set a price floor but no ceiling. The buyer uses options to offset the risk. MPC’s are popular as a way for farmers to sell cash grain, yet retain a chance for higher prices. MIX & BLEND - The difference (plus or minus) between discounts taken on grain receipts and discounts suffered on grain shipments. Moisture discounts are generally treated separately when drying is done. Generally treated separately from “shrink.” Cleaning activities are often included in mix & blend. MIXED WHEAT - Wheat that contains less than 90% of one class and more than 10% of one other class that meets the definition of wheat. (See “WHEAT.”) Reference: http://archive.gipsa.usda.gov/reference-library/standards/810wheat.pdf MM (Mid-Miss) - The Mississippi River from Winfield, MO through McGregor, IA. MOC - Market on Close. A type of futures order that will be executed at a price within the closing price range of a day’s futures trading session. Often used in the grain industry to “prehedge” by selling futures on the close against expected overnight cash grain purchases. (See “PREHEDGE.”) MOVING AVERAGE - Generally, a simple average of prices over the most recent time period of a certain length. (E.g., the last thirty trading-days prices summed, divided by the number of trading days.) MPCI – Multi peril crop insurance. A type of federally subsidized yield-based crop insurance available to farmers that pays in the event of certain yield shortfalls. Payouts are determined based on individual farm production yields. (See also "GRP" and “CRC.”) Reference: http://www.rma.usda.gov/policies

MSW - Municipal solid waste. Certain elements of municipal trash that contain cellulose that could be converted to ethanol. This includes paper waste, yard clippings, landscape

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43 prunings, and similar materials. (Source: Downstream Alternatives research project for the Department of Energy.) MTBE - methyl tertiary butyl ether, an oxygenate. MTBE is an additive to gasoline (and other petroleum fuels) for the purpose of reducing emissions of CO2 and benzene. MTBE was typically added to reformulated gasoline, oxygenated fuel, and premium grades of unleaded gasoline. MTBE is a potential carginogen and has largely been replaced by ethanol as the oxygenate for most US gasoline. MTBE is an alternate and competitor to ethanol, used under the Federal Reformulated Gasoline Program (FRGP) from the Clean Air Act of 1990 (amended 1995). This act requires this gasoline to contain at least 2% oxygen by weight. Reference: http://www.epa.gov/swerust1/mtbe MTCT – Mississippi River navigation and freight term meaning “Memphis thru Cairo terms.” NAEGA - (nay-guh) The North American Export Grain Association. A trade association whose members have an interest in grain exporting. NAEGA 2 - A contract form developed by NAEGA to define standard trading practices in export grain trading. Typically, trade confirmations will specify the negotiated terms (price, time of shipment, etc.) and refer to NAEGA 2 for ‘boilerplate” language. NAEGA 2 is used in export trade much as the NGFA Trade Rules are used in domestic trade. Reference: http://naega.org/contracts/index.shtml NAFTA - North American Free Trade Agreement. Early 1990’s agreement between Mexico, Canada, and the United States to reduce trade barriers and tariffs to stimulate crossborder trading. Reference: http://www.fas.usda.gov/itp/Policy/NAFTA/nafta.asp NAIS – Acronym for National Animal Identification System. A modern industry/state/federal identification system operated to trace animals such as cattle from birth to slaughter for the purpose of tracking infectious disease or other animal health event. Reference: http://www.aphis.usda.gov/traceability/downloads/NAIS-UserGuide.pdf Reference: http://www.aphis.usda.gov/newsroom/content/2007/02/NAISuserguide.shtml NARROW-BASED INDEX – A stock index based generally on 9 or fewer stocks or whose market value is concentrated among a few of the component issues, typically within a specific industry group. Futures on narrow-based indices are subject to joint regulation by SEC and CFTC. NCRI - Net Cash upon Receipt of Invoice. (See “CRI.”) NEGATIVE (basis) - Refers to a basis less than zero, i.e. a minus basis, which occurs whenever cash is below futures. E.g., “If Dec futures are at $2.80, and the cash price in Iowa is $2.70, the basis is negative 10 (also called “10 under”).”

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44 NET (freight) - The actual weight of cargo loaded on a conveyance, calculated by subtracting the tare (empty) weight from the gross (loaded) weight. NET CASH - (See “CRI.”) NET FOB BUYER - An international trader who typically sells more grain overseas than his/her seaboard elevators (if any) can load out, therefore becoming a “net fob buyer” from other companies operating export elevators. NET POSITION - The amount by which purchases exceed sales (net long) or sales exceed purchases (net short). Should specify whether it refers to a flat price position, a basis position, etc. When referring to basis positions, usually broken down by time periods. E.g., “Our net basis position for this fall is long ½ million.” NFA - National Futures Association. An SRO, Self-Regulatory Organization, its purpose is to assure high standards of business conduct and financial responsibility in the futures and options industry. NFA handles registrations and audits. Reference: http://www.nfa.futures.org NGFA - National Grain & Feed Association. National trade association whose members include firms engaged in warehousing, processing, manufacturing, merchandising, or distribution of grain, feed, or feed ingredients in the U.S. Associate members include firms engaged in a business affiliated with the grain or feed trade. Associate trading members include firms located in Mexico and Canada. Allied members, who have no voting rights, include those associated with the barge freight industry. Reference: http://www.ngfa.org NGTC - National Grain Trade Council. National trade association whose policy making members are grain exchanges, boards of trade, and national grain marketing organizations. Associate members include grain companies and related businesses. NIXTAMAL – tortilla makers (e.g.,"….the Mexican nixtamal industry…..") NO PRICE ESTABLISHED (NPE) - A cash market contract type, similar to Delayed Price. (See “DELAYED PRICE.”) NOAA – Acronym for National Oceanic and Atmospheric Administration. A federal government agency. Reference: http://www.noaa.gov NOLA - Short for New Orleans, LA. The New Orleans, Center Gulf area. NOMINATE (freight) - A declaration by a seller of freight or, more often, a buyer of grain “FOB in buyer’s equipment,” that specific freight is available and being applied to the contract. This freight could be a numbered train ready for empty billing to a loading point, a vessel approaching port, etc. In many cases, it is at this time that the buyer of freight (or seller of grain) must declare a specific loading elevator.  2011 Grain Service Corporation Version 11

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NOPA - National Oilseeds Processors Association. Formerly NSPA, National Soybean Processors Association. Most processors are members. Reference: http://www.nopa.org NPE - (See “NO PRICE ESTABLISHED.”) NS - Northern Spring wheat. A subclass of Hard Red Spring wheat. Contains 25% or more, but less than 75% of dark, hard, and vitreous kernels. (See “WHEAT,” “DNS.”) NT – (Net ton) 2,000 lbs. Most often seen in the context of freight rates. E.g., “The tariff rate is $4.15/NT.” NTR Normal Trade Relations. A preferred trading status granted by countries to other countries that satisfy certain standards. (A country can be granted permanent NTR status by the US Congress.) (See “WTO.”) OECD - Organization for Economic Cooperation and Development, formed to support sustainable economic growth and financial stability. Thirty member countries, mainly from Europe and E. Europe, along with the United States. No Asian or African countries are members. Reference: http://www.oecd.org OFFER - In many markets, including the grain trade, this refers to an “offer to sell” made by a seller, as opposed to the term “bid” which refers to a solicitation to buy. (See “BID.”) OFFICIAL INSPECTION - An inspection and certification of a grain sample by an official inspector of an official inspection agency (approved by FGIS). The sampling may be done by an official inspector (Class A), a licensed elevator or warehouse employee (Class B), or anyone (Class C). Unless specified otherwise, refers to a Class A inspection. Ref. NGFA Trade Rule 10. A Class A grade certificate is printed on white paper, a Class B on yellow, and a Class C, on pink. Reference: \http://archive.gipsa.usda.gov/programsfgis/services.htm OFFICIAL WEIGHTS - Weights on scales approved by USDA and supervised fully (Class X) or partially (Class Y) by USDA. The term “official” is often misused to mean Certified Weights. Ref. Rule 14, NGFA Grain Trade Rules. OHIO RIVER - In barge and freight trading, the stretch of river from Cincinnati, Ohio through Cairo, Illinois. (See “ORS.”) OIL-WORLD - A forecasting and information service for world oilseeds, based in Hamburg Germany. Reference: http://www.oilworld.biz O/N/D - October-November-December. In the past, was a widely used trading time slot in many markets. Not used so much now; December is usually broken out.  2011 Grain Service Corporation Version 11 Rev

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ON TOW - A term used in barge grain and freight trading to describe a barge which is included in a tow (and moving) as opposed to one which might be sitting in a fleet waiting to be picked up. (See “AFLOAT.”) Often the name of the towboat and/or a recent location of the tow is also included in the description. E.g., “We paid 210% for a couple of barges on tow the Conti Nan at Mile 196.” ONECHICAGO– (one word) A joint venture of the Chicago Board Options Exchange, the Chicago Mercantile Exchange, and the Chicago Board of Trade to offer trading in security futures. (2002) All trading is electronic, using the Globex2 platform. Reference: http://www.onechicago.com OPEC – Organization of Petroleum Exporting Countries. An organization of twelve developing oil-producing countries whose stated mission is to achieve stable oil prices that are fair and reasonable for producers and consumers. Reference: http://www.opec.org OPEN NAV - The opening of navigation. May refer to the Mid-Miss and Twin Cities, areas of the Mississippi River that are frozen-in several months each year, or to the Great Lakes. Navigation is usually “open” when the first boat (Lakes) or barge tow (river) arrives. Generally this is in March for the Upper Mississippi and April for the Lakes. OPEN NAV – For grain contract purposes the opening of spring Mid Miss navigation is ‘set’ by a 3 person committee of the National Grain & Feed Association. Reference: National Grain& Feed Assn Barge Trade Rule 18 (i) “Opening of the Mid Mississippi.” OPEN INTEREST – The total number of futures contracts long or short in a delivery month or market that has been entered into and not yet liquidated by an offsetting transaction or fulfilled by delivery. Also called open contracts or open commitments. OPEN PURCHASES (or SALES) - Unshipped balances on contracts to buy (or sell) cash grain. OPENING - The opening of navigation on a lake or river system, usually after closing caused by winter conditions. OPIS – Oil Price Information Service, is the world's most widely accepted fuel price benchmark for supply contracts and competitive positioning price.” Reference: http://www.opisnet.com/ OPTION PRICE – A basis of zero; cash is even with the futures. E.g., “Since the cash price is $2.25 and futures are $2.25, the basis is option price.” OPTIONS - Contracts that give the buyer the right, but not the obligation, to (1) buy a commodity or futures contract, or (2) sell a commodity or futures contract. The right to buy a commodity is a CALL; the right to sell a commodity is a PUT. Options are  2011 Grain Service Corporation Version 11

47 traded based on some pre-determined price (strike price), for a fixed period of time. E.g., “I bought a Dec 2.80 corn call for 12¢ yesterday, when Dec futures were trading at $2.82.” Still used by some to incorrectly refer to the futures contract itself. ORDER NOTIFY BILL OF LADING – See Bill of Lading. In addition to other bill of lading functions an order bill of lading is a negotiable legal document of title to the goods described (the cargo). An order bill of lading can be attached to a bank draft to assure payment before a shipment is released by the carrier at destination. Some railroads have phased out O.N. bills of lading. Reference: http://www.marad.dot.gov/publications/glossary/O.html ORDINARY (“ORDS”) - Wheat with a protein level of less than 11%. (See “HIGH PRO.”) ORS - (Ohio River and south.) Refers to barge shipments originating on the Ohio, or on the Mississippi, south of the confluence of the two rivers at Cairo, Illinois. O/S – “On station.” A barge trading term. OTC – See “Over the Counter.” OTHER CLASSES - A grade factor for wheat. E.g., “Number 2 Soft Red Wheat can contain up to 5% wheat of other classes.” Classes include Hard Red Winter wheat, Soft Red Winter wheat, and Durum wheat, among others. OUT OF CONTRACT - A buyer or seller who has not fulfilled contractual obligations. A shipment that does not meet the contract specifications (not applicable). E.g., “If we don’t get that train billed by midnight, we’ll be out of contract.” OUT OF POSITION – A hedger who has failed to hedge all or part of his/her priced cash grain position with futures and is exposed to market risks associated with changes in futures prices. To be net long or short by more than a designated tolerance. OUT OF POSITION HEDGER – Any hedger not geographically able to economically make or take delivery in the futures market. OUT OF THE MONEY – An option whose strike price is away from the current market price and that has no exercise value. E.g., “An option to sell at $2.20 is ‘out of the money’ if the market is at $2.34.” OUT-TURN WEIGHTS - Destination weights. OVER (basis) – A basis that is positive, i.e. greater than zero, whenever the cash grain price is higher than the futures price. E.g., “The corn basis today is ten over March -- the cash price is $2.80 and futures are at $2.70.” OVER THE COUNTER (OTC) –The trading of commodities, contracts, or other instruments not listed on any regulated exchange. OTC transactions can occur electronically or over the telephone. Also referred to as “Off-Exchange.”  2011 Grain Service Corporation Version 11 Rev

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OVERFILL - To ship more than the contracted quantity on a cash contract. Pricing criteria for overfills (or underfills) on cash contracts are outlined in NGFA Rule 23. PADD – Petroleum Administration for Defense Districts. The five geographic areas of the US established for national defense purposes, now routinely used in the analysis of the petroleum industry. PADD I-V. PANAMAX - A ship approaching the maximum size that can pass through the Panama Canal. A Panamax will carry slightly over 50,000 tonnes of heavy grains (roughly 2 mil. bu.). (See also "Post-Panamax.") Also described as carrying 4600 to 4800 TEUs. Reference: http://www.globalsecurity.org/military/facility/panama-canal-panamax.htm PAPER - Cash grain contracts held by resellers. Sometimes refers to the amount of reseller activity or liquidity in a market. E.g., “CIF Barge trading used to be an active paper market when there were more resellers around.” PAPER TRADER – A reseller; someone who buys and sells commodities without physically handling them. PARTIAL BUNT – See KARNAL BUNT. PAYMENT CAP – Ceiling set by Congress under the Farm Bill that specifics maximum support/income payments a producer or entity may receive from marketing loan gains, countercyclical payments and decoupled-fixed payments. The 2007 Farm Bill is being developed and payment caps are not finalized (See “AGI” and "Three-Entity Rule.") PAYMENT TERMS - The contract terms defining when payment is due, in what form, how funds will be transmitted (where), and the necessary documentation. PCP – Posted County Price. A value determined by USDA that reflects a localized price for a commodity. Used for purposes of determining redemption values on FSA marketing loans or for calculating LDP rates. (E.g., “Farmer Smith’s county loan rate is $1.80, today’s PCP is $1.75, so his LDP rate would be 5¢.”) PDS - Price on date of shipment. This instructs the cash seller to buy futures on date of shipment (typically done “market on close”) in order to set the final cash price to the buyer, typically a flat price user. PDSS - Price on date of scheduled shipment. (See “PDS.”) PERSON– As used in USDA programs for benefit purposes: “A person for payment limitation purposes may be many things, including an individual, a limited liability partnership, a limited liability company, or an individual participating as a member of a joint operation, a corporation, an association, a limited partnership, or irrevocable trust…..(continued). For an individual or entity to be considered a separate ‘person’,  2011 Grain Service Corporation Version 11

49 the individual or entity must have a separate and distinct interest in the land or crop involved, exercise separate responsibility for this interest, and maintain funds or accounts separate from that of any other individual or entity for this interest.” (Source: USDA/FSA Fact Sheet November 1999) Reference http://www.fsa.usda.gov/pas/publications/facts/html/payelig01.htm PHYSICALS - Cash commodities as opposed to futures. Actuals, cash grain. PHYTOSANITARY (CERTIFICATES) – Also known as a Phyto or Phytosanitary Inspection Certificate. A document issued by an export country’s government to satisfy import regulations of the import government, indicating that the shipment has been inspected and is free from harmful pests and plant diseases. Also: Pertaining to the health of plants. PL 480 – The foreign aid bill under which most shipments of donated commodities are made and financed. PLATE – The Argentine river from which exports of grain are made. E.g., “U.S. corn is $5/tonne cheaper than Plate Maize in Rotterdam.” PNW – Pacific Northwest. Export ports include Portland, OR; Kalama, WA; and Tacoma, WA.. POSITION - Whether one is long or short, and how much. Can apply to basis, futures, freight, etc. E.g., “Our basis position is long ½ million new crop to-arrive corn.” POSITION REPORT - (Also Hedge Position Report.) A report for management, the purpose of which is to provide information on the company’s exposure to price and basis risks. POSITIVE – (basis) A basis that is greater than zero. E.g., “The local soybean processor is bidding $6.10, and futures closed at $6.05; the basis is +5.” (See “OVER.”) POST-PANAMAX – Vessels whose size exceeds the dimensions for The Panama Canal. (Also "Super post-Panamax") Post Panamax vessels carry 6000 to 8000 TEUs. Reference: http://www.m-i-link.com/dictionary/default.asp?term=post+panamax Reference: http://www.portoftheamericas.com/pdf/PLA_Jun08/Caribbean_Business_053107.pdf POSTED COUNTY PRICE (See “PCP.”) PPN – (See “Principal Protected Notes.”) PRE-ADVICE - A term associated with trades FOB elevator in buyer’s equipment. Typically used in vessel trading. Notification to the shipper regarding what transportation will be nominated, and the quantity to be loaded. (See “NOMINATE.”)

PRE-HEDGE – to sell futures in anticipation of purchases expected to be made outside of market hours (overnight, weekends, holidays). Also, to buy futures in anticipation of

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50 cash sales outside of market hours. E.g., “We expected to buy 20,000 bu. of wheat over the weekend, so we pre-hedged (sold) 4 futures on the close on Friday.” PREMIUM (cash grain) - A higher than standard price. E.g., “High protein wheat is trading at a 30 cent premium to ords.” PREMIUM (options) - The price or cost of an option. (Also see “TIME VALUE,” “EXERCISE VALUE.”) PREMIUM CHARGE – CBOT term used with corn and soybean futures deliveries effective January 2000. Formerly known as “storage”, this refers to the daily rate due the issuer of a shipping certificate by the holder of the certificate. (was $.0012/bu/day in Chicago and Burns Harbor, $.001/bu/day on the Illinois River and in St. Louis, MO until October, 2001. Effective November 1, 2001 ‘storage’ rate on all CBOT delivery certificates rose to $.0015 per day on corn and soybeans and was raised again in 2008 to $.00165/day, or approximately 5¢ per month. Reference: http://www.cmegroup.com/rulebook/CBOT/II/14/108.html Reference: http://www.cmegroup.com/rulebook/CBOT/index.html Chapters 10, 11, 14 ) On CBOT wheat futures, the premium charge was changed again in late 2008 to a ‘variable storage rate’ whereby the daily rate can rise or fall with each delivery cycle based on a complex formula. The maximum increase per cycle is $.001 per bushel per day, with no maximum total rate. The minimum rate shall not go below $.00165/bu/day (approximately 5¢/mo). PREMIUM TO FUTURES – CBOT term used in the IWDS delivery mechanism. Formerly known as “load-out charge.” As of late 2002, corn 4¢/bu., soybeans 4¢/bu. PREMIUMS (basis) - Another word for basis. E.g., “We expect tight farmer holding and strong premiums next spring.” More common in export trading. PREPAY - To make payment prior to shipment. Often done for tax purposes. (Several changes in the tax laws have restricted this.) E.g., “The feedlot wants an offer of JFM corn, to be prepaid on December 31.” PRICE RISK –Risk associated with possible changes in prices, usually futures prices as opposed to basis risk. PRICED – A contract with the price established (as opposed to an unpriced basis or DP contract). PRINCIPAL - A buyer or seller; one who actually takes title to the grain, as opposed to a cash grain broker, who does not. PRICIPAL PROTECTED NOTES (PPNs) – A fixed-income security that guarantees a minimum return equal to the investor's initial investment (the principal amount). PPNs

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51 may offer the investor less than 100% of a favorable market move in return for protecting 100% of the investor’s principal against loss. (E.g., 50% of the upside with no risk to the downside.) PPNs can be longer-term investments covering several years; some may pay some interest before maturity. Agricultural commodity PPNs are available to investors. PRODUCTION FLEXIBILITY CONTRACT (“PFC”) – 7-year agreement between enrolled producers and USDA that served as the basis for farm program benefits under the 1996 Farm Bill. Farms eligible to receive payments under USDA PFCs were those enrolled when a one-time sign-up was held in 1996. Contracts began with the 1996 crop and extended through the 2002 crop. Eligible enrolled persons received annual Production Flexibility payments (rates vary by crop year) based on a quantity of production defined under the Farm Bill, as well as other benefits. Annual PFC payments were made on 85% of the contract acreage multiplied by the farm program payment yield. The annual payment rate was set each year based on an aggregate fund divided by the sum of the payment quantities. PFC payments were subject to a $40,000 ‘per person’ payment limitation each year. (Source: USDA Fact Sheet, February 1999) Replaced by the Fixed Direct payments in the 2002 Farm Bill. Reference: http://www.fsa.usda.gov/pas/publications/facts/html/Prodflex'99.htm PROMPT - Shipment within 10 days. See NGFA Grain Trade Rule 18. PROP - Proportional billing. Term usually used to distinguish shipments moving under proportional rates from those moving under point to point or transit rates. PSD - Processor Scale of Discounts. Contract term(s) that define the discount schedule for grain of lesser quality than the contract specification grade at one or more processor markets. Buyers often use this generic term “PSD” to indicate that the applicable discounts will be whatever the buyer is posting at time of delivery without defining the specifics on the contract. PUT - (noun) An option giving the buyer to right to sell futures at a specified price (strike price) for a specified time. E.g., “I bought a Dec 2.80 corn put for 15¢ today. I can exercise that anytime and be short Dec corn at $2.80.” PUT OUT - (verb) To make delivery against a futures contract via surrender of approved warehouse receipts (or Shipping Certificates at some exchanges). E.g., “Cargill put out 10 million corn yesterday on the Dec.” (See “STOP.”) QUICK - Shipment within 5 days. See NGFA Grain Trade Rule 18. RA (Revenue Assurance) – A type of federally-subsidized, revenue-based crop insurance. RA provides dollar-denominated target coverage with the producer selecting 65-75% of expected revenue. (See also "CRC' and "IP.") Reference: http://www.rma.usda.gov/policies/#grp RACK PRICE – (Fuel trading term) Price charged by a supplier to a customer that buys transport truck lots at a terminal, on a free on board basis. Usually reflects the price for

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52 small independent customers at bulk terminals. The state of Nebraska maintains an up to date database of average monthly rack prices for both ethanol and unleaded gasoline at this website (scroll down the webpage to the tabular data): Reference: http://www.neo.ne.gov/statshtml/66.html RAPESEED - An oilseed crushed primarily for its oil content. Canola is a low-erusic acid hybrid of rapeseed. Canola oil competes with edible soybean oil. Standard rape oil is used for industrial purposes. (See “CANOLA.”) RBOB – Acronym for “reformulated gasoline blendstock for oxygen blending” (RBOB). This 42,000 gallon futures contract, traded at the CME (formerly NYMEX), replaced the Unleaded Gasoline futures contract at NYMEX. Reference: http://www.cmegroup.com/trading/energy/refined-products/rbobgasoline.html REAL – (pronounced “ree-al”) The currency of Brazil. conversion is approximately $1 = 2.0 reais.

Plural is “reais.”

In 2007, the

REFORMULATED GASOLINE - (See “RFG” and “RBOB”) REGIONAL (railroads) - An AAR (American Association of Railroads) term used to classify part of the nation’s Non-Class I railroads. Regional carriers are line-haul railroads operating at least 350 miles of road and/or earning revenue between $40 million and the Class I threshold (in 1992) of $251.4 million. (See “LOCAL” and “CLASS I.”) RENEWABLE FUEL – Fuel derived from renewable biomass and that is used to replace a quantity of fossil fuel in a transportation fuel and for which GHG emissions are at least 20% less than the fuel it replaces. The 20% applies to renewable fuel from new facilities that commenced construction after 12/19/2007 and that are fired by natural gas, biofuels, or a combination. (RFS2) RENEWABLE FUELS ASSOCIATION - Also known as "RFA." The national trade association representing the US ethanol industry. Membership includes ethanol producers, markets, engineers, environmental groups, and other agricultural organizations. Reference: www.ethanolrfa.org RENEWABLE FUELS STANDARD – Set in the federal Energy Policy Act of 2005, the RFS will increase the volume of renewable fuel required to be blended into gasoline, starting with 4.0 billion gallons in calendar year 2006. EPA is responsible for promulgating regulations to administer this program. Details can be found at the EPA website and the Renewable Fuels site. Reference: http://www.epa.gov/otaq/fuels/renewablefuels/index.htm Reference: http://www.ethanolrfa.org RENEWABLE FUELS STANDARD 2 – Standards and regulations announced in February 2010 under the Energy Independence and Security Act of 2007 implementing changes  2011 Grain Service Corporation Version 11

53 in the Renewable Fuels Standard program. The revised requirements specify volumes of cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must be used in transportation fuel(s). The RFS2 is the first time that greenhouse gas emission (GHG emissions) performance is applied in a regulatory context on a nationwide program. Renewable fuel requirements are up to 13.95 billion gallons for 2011 (See “EISA.”) REPO (REPURCHASE AGREEMENT) – A form of short-term borrowing, a ‘repo’ is an agreement with a commitment by the seller to buy a collateral back from the purchaser at a specified price (or basis) at a designated future date. Also called a repo, it represents a collateralized short-term loan for which the collateral could be commodity inventory, a Treasury security, money market instrument, federal agency security, mortgage-backed security or other asset. From the purchaser's (customer's) perspective, the deal is reported as a reverse repo. In grain trading, repo’s may be referred to as a “basis repo.” REQUEST FOR OFFSET – (See “Fungibility.”) RESELLER - A trader (paper trader) who does not physically handle the grain through a facility. RESISTANCE - Used by chartists to refer to a price level where (they think) significant selling pressure will develop. RESTITUTION – A term used in reference to EU trading; a synonym for “subsidy.” For the European Union, the level of export restitution depends on the difference between world price and the EU domestic price. If domestic price is above the world price level, EU will provide a restitution. EU exporters can purchase intervention stocks or open market stocks; in either case subsidies are available to lower the EU price to world market values. (See “Intervention.”) REVENUE ASSURANCE – (See "RA.") REVENUE-BASED COUNTER CYCLICAL PAYMENTS See “Counter-Cyclical Payments (Revenue-Based). Program under consideration for the 2007 Farm Bill. REVERSE CRUSH (board) – (noun) To buy CBOT soymeal and soyoil futures, and simultaneously sell soybean futures. The difference between the value on the futures market of a bushel of soybeans vs. the soybean oil and meal it will produce when processed. Quoted in terms of cents per bushel. A 60 lb. bushel yields about 44 lbs. of meal and 11 lbs. of oil. A CBOT reverse crush entails selling 10 contracts of soybeans, buying 11 contracts of soymeal, and buying 9 contracts of soyoil. E.g., “Meal closed very strong today and widened the crush to 55 cents.” (See “BOARD CRUSH.”) RFG (REFORMULATED GASOLINE) – The Federal Reformulated Gasoline Program (FRGP) from the Clean Air Act of 1990 (amended 1995) requires this gasoline to contain at least 2% oxygen by weight. The dominant oxygenate used as of 2001 is MTBE (See “MTBE.”), approximately 85%, with ethanol as the alternate. (See  2011 Grain Service Corporation Version 11 Rev

54 “Ethanol.”) Reference: http://www.epa.gov/swerust1/mtbe Reference: http://www.epa.gov/swerust1/mtbe/mtbeprop.htm (FRGP) Reference: http://www.ethanolrfa.org (ethanol, renewable fuels) RFS – ( See “RENEWABLE FUELS STANDARD.”) RFS2 – (See “RENEWABLE FUELS STANDARD 2.”) RIN CREDITS – “Renewable Identification Numbers” – This program, established in 2007 by EPA, requires that every batch of ethanol produced will have a 38 digit number which identifies the production down to the date and plant location. The RIN follows the ethanol; blenders report the RINs to EPA for proof of compliance with EPA requirements. RINs can be traded among firms; firms that blend more than their requirement can sell the excess RINs to blenders who want to blend less than the required minimum ethanol, or who for whatever reason are unable to secure sufficient ethanol. Reference: http://cleanfuelsclearinghouse.com/ RISE (basis) - (verb) A term used to describe a market where cash prices are firming relative to futures. E.g., “I’m long the basis on 500 corn, and the basis is rising so I’m doing okay.” RIVER CROSSING - A point at which rail shipments moving to a domestic deficit area will cross the Mississippi River System. E.g., “Evansville, Indiana is a river crossing for corn moving into the Southeast.” RMA – Risk Management Agency. An agency of USDA that is responsible for federal crop insurance and related programs. (See also “MPCI” and “Crop Revenue Coverage.”) Reference: http://www.rma.usda.gov ROLL – To move a cash grain or futures position into a different (usually more deferred) time slot by simultaneously buying one futures month and selling another. (See “SPREAD.”) E.g., “We rolled our Dec futures to March today at a 6¢ carry.” “ROUNDUP READY”TM SOYBEANS - The first genetically engineered product to enter U.S. soybean production. These GMOs are resistant to the Monsanto herbicide “Roundup.” Various companies market Roundup Ready TM soybean seed. (Also "Roundup Ready corn") Reference: http://www.monsanto.com/products/Pages/soybean-seeds.aspx Reference: http://www.btny.purdue.edu/weedscience/2004/articles/RRtime04.pdf

RSI - Relative Strength Index. A technical trading term. RSI is a gauge of the relative strength of directional price movements. Some technical traders believe a low RSI (usually around 20 or below) is a sign of a market due to turn up. A high RSI (usually 70 or above) is viewed as an indicator of a market prone to a down turn. S&T - Stowed and Trimmed. Refers to cargo loading on barges and ships.

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SAFRAS - A private company, with offices in Brazil and Argentina employing economists and journalists. Considered an important information center for commodity research and financial/ business information, forecasts and consulting in South America. Reference: http://www.safras.com.br (click on English section) SAINT LAWRENCE SEAWAY - The navigable section of the St. Lawrence River. Sometimes used to include the area of lakes, rivers, and canals from the Atlantic Ocean to Duluth/Superior on Lake Superior that is open to ocean-going vessels. The Welland Canal (and locks) is the section that connects Lake Ontario to Lake Erie (at Buffalo, NY). Sault Ste Marie is the stretch connecting Lake Huron and Lake Superior. Reference: http://www.greatlakes-seaway.com/ SALTY - Any ocean-going vessel that also calls on Great Lakes ports. Separate from “Lakers,” vessels that work the Great Lakes, but do not go into the oceans. (See “TOP OFF” for clarification.) SCALPER (futures) - A floor trader who typically tries to catch quick, small price movements, rarely carrying a position overnight. (See “LOCAL.”) SCALPER (elevator operations) - A device used for cleaning grain. SCHEDULE (boat schedule) – Expected arrival times at various loading points by a towboat providing empty barges. When a seller of barge freight provides a schedule, the buyer must furnish the seller a named origin point(s) based on the schedule. SCREENINGS - Small particles of grain and FM obtained from cleaning grain. In corn, specifically that which passes through a 12/64 round-hole sieve and all matter other than corn that remains in the sieved sample as described in FGIS instructions. Used as a feed product. SCRGS - (See “SCREENINGS.”) SELL OUT - An actual sale of grain of like kind and quantity on the open market, or to establish a fair market value on unshipped grain. Used to determine market value and assess damages due to a Buyer’s failure to perform on a contract. A trade made by a Seller for the account of a Buyer who has failed to provide billing on a shipment. (Reference NGFA Grain Trade Rule 28.) SERIAL OPTIONS - Short-term options on months for which there are no futures contracts. Serial options are used to “fill-in” the months between regular futures options. They are designed so there is always an option available with one month or less until expiration. ( Ex: on corn futures, when Dec corn options expire in late November, the January “serial” option on March futures would expire in late December. The January “serial” option is exercisable into March futures.) SHIPPER’S EQUIPMENT - A contract term whereby it is the shipper’s responsibility to obtain transportation, usually railcars.

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56 SHIPPING CERTIFICATE(S) (CBOT) – The instrument to fulfill delivery obligation(s) against short corn or soybean futures contracts at the Chicago Board of Trade. (Effective with year 2000 contracts) and CBOT wheat effective July 2008. Replaced delivery via warehouse receipt. A CBOT Shipping Certificate represents a demand on shipping capacity at a specified location along the Illinois Waterway Delivery System (IWDS), that has been designated by the CBOT as regular to issue such certificates. The facility does not have to hold inventory in the river location in order to issue a certificate. SHIPPING DOCUMENTS – Clause 12 in the NAEGA-2 export contract, describing terms for payment: "Payment to be made against bills of lading or mate's receipts, quantities and qualities loaded (including percentage of dockage if applicable) shall be given or passed on by seller to buyer without undue delay. Notices of delivery shall be subject to correction of any errors." (See "NAEGA-2".) SHORT - To have sold more than one owns or has contracted to buy. The opposite of “LONG.” A short benefits from price (or basis) declines, and suffers when price (or basis) increases. Also, to have less of something than one needs. E.g., “I’m short 2 million corn to the river for Jan-July.” SHORT TON - 2,000 pounds. A metric tonne, which is used in international trading, is 2204.62 pounds (1000 kilos). SHORT-BOUGHT - Refers to a user who has not covered his/her needs. SHUTTLE TRAIN An efficiency train, of 75-100 car units (or grouped sets of 25 cars), loaded in 24 hours or less. Operated on the Burlington Northern or Union Pacific railroad. Other railroads typically refer to these as “bullet trains.” “SIDE BY SIDE” – Descriptive term for simultaneous futures/options trading via both open outcry “pit” trading and electronic “black-box” trading. Side by side daytime trading has been available at the CBOT, KCBT for most agricultural products since mid 2006 via ecbot. SIGHT DRAFT - A bank draft which is payable upon presentation at the collecting bank. i.e., “on sight.” SINGLE M - (See “WAM.”) SLED – (Single Line Entry Data) Trade Poster allows clearing firms to submit spread trades at a differential price. SmartStax® – A product of Monsanto and Dow, SmartStax® GM corn has eight genetic modifications to address three areas of concern: (1) above-ground insect control for insects such as earworm, fall armyworm, and cutworms. (2) Below-ground insect control e.g., against rootworm, and (3) weed control with herbicide tolerance. Reference: http://www.monsanto.com/products/Pages/genuity-smartstax-corn.aspx

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57 SPAN® – The Standard Portfolio Analysis of Risk (SPAN) performance bond system. A program that determines portfolio performance margin requirements for futures, options, cash, and other instruments. SPAN is a portfolio-based approach to risk performance initial margin calculations which may be applied easily to any exchange's margining methodology, either gross or net. SPAN may be incorporated into any firm's bookkeeping system. CME Clearing uses SPAN to margin clearing firms, and clearing firms use SPAN to margin their customers. SOFTEN - To decline to lower (but not sharply lower) values. E.g., “The Chicago processor basis softened 3¢ this week from +5 to +2 Dec.” S/O/N - September-October-November. Reference to a stated shipment period. SORGHUM (GRAIN) –The official USDA term for milo. Grain Sorghum is a feed grain crop more commonly raised in dry land areas of the Western Corn Belt and the Southwest. SOY(BEAN) MEAL – The feed product that remains after extracting oil from whole soybeans. It is one of the most common high-protein feedstuffs, and is commonly used for cattle and hogs. High-pro meal is 48% or higher. The lesser produced standard is 44%. SPLIT - A shipment period calling for equal shipments each half month. E.g., “CIF corn for split October is bid +25.” SPOT - Usually refers to loaded shipments. E.g., “The market for spot cars is +5.” SPREAD - The difference between two futures prices. Spreads may be intercommodity (E.g., corn vs wheat), or time-related (E.g., March vs May corn). When used as a verb, “to spread” means to buy one futures month and simultaneously sell another. E.g., “We spread Dec-March corn at 9.” SRW - Soft Red Winter. A class of wheat. This is a low protein, but high yield (per acre) wheat. Used in manufacture/baking of cakes, cookies, pastries, and some breads. Raised principally east of the Mississippi River. There are no subclasses of SRW wheat. (See “WHEAT,” “SWW.”) Ref: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/winter_wheat.pdf SSHX - Saturdays, Sundays and Holidays excluded. Sometimes used to define free time for demurrage/dispatch purposes. STAGE – In reference to depth of water on a river. Water surface elevation referred to some arbitrary gauge datum. E.g., “Flood stage at (location) is 25’.” Gauge height is often used interchangeably with the term “Stage.” (See “Gauge.”) “STARLINK”  – A trademark name of Aventis Crop Science for corn varieties containing the CRY9C gene. The CRY9C gene, from Bacillus thuringiensis (Bt) subspecies tolworthi, encodes an insecticidal potein effective against the European corn borer. Starlink  corn was marketed under varietal names from several seed companies. EPA  2011 Grain Service Corporation Version 11 Rev

58 withdrew the Starlink registration (limited to production for domestic feed consumption) in the fall of 2000 upon request by Aventis SA. Reference: http://www.starlinkcorn.com/ STOP – (verb) To take delivery against a long futures contract via receipt of approved warehouse receipts (or Shipping Certificates at some exchanges). E.g., “Cargill stopped 10 million corn yesterday on the Dec.” A person or firm can ‘stop’ a delivery without actually loading out the commodity. The paper can be resold. (See also “PUT OUT.”) STOP – (noun/adjective) A Stop order is a type of futures or options order. A “Stop” order rests in a broker’s deck (or in an electronic market log) until a specific market condition is reached, at which time the order becomes a “Market” order to be executed immediately. A “Buy Stop” is an order to buy at a price above the current market and becomes a market order to buy when the market trades at or is bid at the ‘stop’ price. A “Sell Stop” is an order to sell at a price below the current market. A trader may use a stop order to exit a trade in an effort to minimize a loss. (E.g., “Dec corn closed at $2.50 today, and I put in a “Buy Stop” to buy 3 Dec corn $2.55 stop.”) STOP LIMIT – A variation of “Stop” order in which a trade must be executed/filled only at the exact price, or better. If the order cannot be executed immediately when triggered, the order is held until the stated price (or better) is reached again. (CBOT Glossary.) STP/SAVAGE – A Mississippi River navigation/barge freight term meaning “Saint Paul (MN) to Savage (MN). STRADDLE - An option position consisting of the purchase of put and call options having the same expiration date and strike price. STRANGLE - An option position consisting of the purchase of put and call options having the same expiration date, but different strike prices. STREAM DAYS - Number of days a refinery or ethanol plant operates to reach its annual volume, discounting maintenance and service days. Operating year is typically based on 330 stream days for a refinery, and 350 days for an ethanol plant. (Source: Downstream Alternatives research project for the Department of Energy.) STRENGTHEN - To rise in value or price. STRIKE PRICE - The exercise price of an option. The price at which the rights of an option can be exercised into a futures contract. E.g., “A Dec $2.40 call has a $2.40 strike price. You can buy futures at $2.40 if you want to exercise the call.” (See “EXERCISE PRICE.”) Reference: http://www.cmegroup.com/rulebook/CBOT/II/10A/ STRING - A series of transactions in which one lot of grain is resold several times. For example, a string could have a shipper on one end, a terminal elevator on the other,  2011 Grain Service Corporation Version 11

59 and a number of resellers between. A string can also be made up entirely of resellers. (See “CIRCLE.”) STSTM soybeans - A non-GMO, conventionally bred Pioneer soybean variety that is presently the only soybean containing the STS gene, rendering the plant tolerant to DuPont Company’s herbicide SynchronyTM . STS is an abbreviation for sulfonylurea (S) tolerant (T) soybeans (S). Used in specialty soybean processing. Source: Michigan State University Extension Service website. SUBJECT - A bid or offer that is not firm and must be reconfirmed before it is accepted (booked). E.g., “The broker had offered it at +14 subject, and the seller withdrew it when we tried to book it.” Bids and offers made during a phone conversation are usually understood to be ‘subject’ once the phones are hung up unless they are specified as ‘firm’. (See “FIRM.”) SUPER POST-PANAMAX – Ocean vessels that cannot transit the Panama Canal and that carry the equivalent of 8000 to 12,000 TEUs. (See “TEU.”) Drafts generally do not exceed 14.5 meters. Reference: http://www.globalsecurity.org/military/systems/ship/container-types.htm SUPPORT - A term used to indicate (futures) price levels where significant buying is expected to appear. (See “RESISTANCE.”) SURE – A program new to the 2008 Farm Bill which provides Supplemental Revenue Assistance for enrolled farms in the event of production loss (or livestock) resulting from adverse weather. Enrolled producers must also have other crop insurance policy coverage. Reference: http://www.fsa.usda.gov/FSA/fbapp?area=home&subject=landing&topic=landing Reference:http://aede.osu.edu/resources/docs/pdf/J2QIF808-OR3A-20GSRT1CIID0JXDFJGJN.pdf (1-page backgrounder from Ohio State Univ.) SWAP - An agreement to use a derivative contract to exchange or “swap” price risks between two instruments; includes an exchange of cash flow. Swaps may be used to hedge existing risk or to speculate. For example, a producer of grain (long) and a user of grain (short) might hedge with a swap contract. In such a case, the user pays the producer a specific amount for each cent some price is below a benchmark value at some date in the future. The producer pays the user if the price is above that level. (See “DERIVATIVE.”) Reference: http://www.margrabe.com/Dictionary.html SWW - Soft White wheat. A subclass of White wheat. SWW is grown principally in the Pacific Northwest, and northern tier states of the eastern U.S. The flour is used for cakes, cookies, pastries, etc. It is a low-protein, high-yielding wheat, similar to SRW wheat for milling purposes. Other subclasses of White wheat are Hard White wheat, White Club wheat, and Western White wheat. (See “WHEAT,” “SRW,” “HWW.”)

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60 SYNTHETICS - Options and futures can be combined to form other net options or equivalent futures positions. These combinations are called synthetics. This is also useful when futures are limit up or down and cannot be traded. E.g., “Long a call and short a put with the same strike price is a synthetic long futures contract.” TAKE(S) - (verb) To receive futures from a grain buyer in an exchange of futures between two parties. E.g., “I will take 10 Dec corn today from ABC Grain Company to price our Oct/Nov sale.” (noun) Unpriced basis sales expected to be priced via exchange of futures. E.g., “I sold 50,000 bushels at +3 Dec to the River, so I’m carrying 10 Dec ‘takes’ (50,000 bu.) on my DPR.” TARE - The empty weight of the conveyance. E.g., “The gross weight of that car was 259,000 lbs, the tare weight was 60,000 lbs., so the net weight was 199,000 lbs.” (See “GROSS” and “NET.”) TARGET PRICE (cash market) - A type of cash contract in which the seller agrees to sell grain (and the buyer agrees to buy grain), at a specified price that is higher than the current price. Also refers to the desired selling price. E.g., “The farmer didn’t like today’s price for harvest of $2.33, so he signed a target price contract with a target price of $2.65.” Often called a “firm offer” when it involves a producer selling to a country elevator. No commitment to deliver exists unless the target price is reached. No correlation to USDA term “TARGET PRICE.” TARGET PRICE (USDA) – Under old USDA Farm Bill provisions, this was the price equivalent guaranteed to a farmer under certain support programs, administered as part of federal legislation. The Farm Bill of 2002 and subsequent 2008 Farm Bill contains a revised Target Price provision for calculation of certain payments. Target-price protection is only provided on Program Crop acreage X 85% X updated program yields, and is totally decoupled from farm production. These payments are known as Countercyclical Payments. (See also "Countercyclical Payments.") Reference: http://www.ers.usda.gov/features/farmbill/analysis/counterCyclicalPayments2002act.htm TARIFF RATE QUOTA – See "TRQ." This system was agreed to in the Uruguay Round of World Trade Organization talks. Reference: http://www.ers.usda.gov/publications/tb1893 TCE – “Time charter equivalent” Ocean freight term, defined as voyage revenue less voyage expenses during the year divided by the number of available days during the year. Voyage expenses include fuel, port call, commissions, stevedore and other cargo related and miscellaneous voyage expenses. No deduction is made for vessel or general and administrative expenses. TCE is an industry standard for measuring and analyzing fluctuations between financial periods and as a method of equating TCE revenue generated from a voyage charter to time charter revenue. TCK (See "DWARF BUNT.") TCS - Track country station. Antiquated cash-market term formerly used to specify that a trade was FOB railcars at a country elevator. (See “FOB.”)  2011 Grain Service Corporation Version 11

61 TEST WEIGHT – Test weight is the weight per Winchester Bushel (2,150.42 cubic inches) as determined using an approved device. Determination made on a portion of sufficient quantity to overflow the ‘kettle’, a standardized vessel proportional to the Winchester bushel. Standardized test weight per bushel for wheat and soybeans are 60#, 56# for corn/grain sorghum. TEXAS GULF - A range of ports on the Western Gulf (also known as TXG) in Texas. This includes Corpus Christi, Galveston, and Houston. TEU – Twenty-foot equivalent units. A term pertaining to containers used in intermodal transport of products or commodities. TEU is used to express the relative number of containers based on the equivalent length of a 20' container. E.g., 100 containers of 20' is 100 TEUs; 100 containers of 40' is 200 TEUs. (See “Containerized shipments.”) Reference: http://www.export911.com/e911/ship/conShip.htm THETA – The ratio of the change in an option price (premium) to the decrease in time to expiration. Also called time decay. THIRTY DAY OPENING - A commonly-traded time slot for grain to/from the Mid-Miss and Twin Cities on the Mississippi River. The shipment period is 30 days following the opening of navigation, usually beginning in early March on the River. (See “OPEN NAV.”) THREE (3)-ENTITY RULE – A 2002 Farm Bill provision allowed one person to be eligible for payments on up to three farm entities. The payment limit on each of the second and third farms was half the amount on the first farm. "Husband and wife" rule was a variation that said a husband and wife are generally treated as one person but they can request to be treated as separate. This essentially doubled the payment cap. The 2008 Farm Bill eliminated the 3-entity provision and requires all benefits be attributed to a living person. Reference: http://www.ers.usda.gov/briefing/FarmPolicy/paylimits.htm TICK – The minimum price move for a commodity futures contract. In corn, one tick = ¼ cent per bushel. TIGHT - Shipments &/or offers are not readily available. E.g., “With the river problems, grain at the Gulf has become tight.” TIME DECAY - The decline in the “time value” portion of an option’s premium over time. This assumes the underlying futures price (and market volatility) remain constant. Time decay is greatest in the latter stages of an option’s life, gaining momentum especially in the final weeks before expiration. (See “TIME VALUE.”) TIME VALUE - (Also known as “extrinsic” value.) That part of any option premium that is not immediate exercise value. E.g., “Dec futures closed today at $2.92. The Dec 2.80 call closed at 18¢; 12¢ was exercise value, so its time value is 6¢/bu.” (See “EXERCISE VALUE.”)

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TO CARRY - A term used in some domestic markets. The buyer has the option to delay shipment by paying specified charges. (See “CARRYING CHARGES.”) E.g., “We sold ‘December to carry’ with carrying charges after December, at 1 cent per cwt. each four days.” TO SHIP - Sometimes used to specify that the buyer does not have the option “to carry.” (See “TO CARRY.”) TONNAGE (transit) - Grain that has moved into a transit point and qualifies for transit billing on an outbound movement. TONNE - Spelling used generally to connote a metric tonne as opposed to a ‘short ton.’ A metric tonne contains 2204.6 pounds and is the common unit for international grain trade. (See “Metric tonne.”) A short ton weighs 2,000 pounds. TOP OFF - Complete the loading of a partially loaded vessel. Usually refers to saltys loaded to maximum allowed draft in the Lakes and completed in the St. Lawrence before heading into the ocean. TRADE OPTIONS - (noun) Cash market options on the physical commodity, as opposed to exchange-traded options on futures. Trade options may only be offered on agricultural commodities by firms registered with the CFTC as an Ag Trade Option Merchant, or if both buyer and seller exceed certain net worth requirements. Minimum (or maximum) price contracts are not considered trade options as long as delivery of the commodity is required, with the final price the only aspect affected by the option portion of the contract. (See “ATOM.”) TRAIN - A unit shipment of 25 or more cars, moving under one bill of lading. See NGFA Grain Trade Rule 30. TRANCHE - A term (of European origin) sometimes used to describe a large sale. E.g., “The last tranche to China traded at +45 FOB Gulf.” TRANSIT - A rail rate allowing shipments to be stored or processed at a point between the origin and the final destination. TRIPLE-STACK – Seed corn that provides genetic protection against two threats: rootworms and Bt corn borer, and also includes the Roundup-Ready herbicide gene. (See also “BT” and “Round-up Ready.”) See also “SmartStax.” Reference: http://monsanto.mediaroom.com/index.php?s=43&item=391 TRITICALE – The crop that originated from a plant breeder’s cross between wheat and rye. The peak acreage was in the 1960’s, at a few hundred thousand acres. By 2000 and later acreage is down to a few thousand. TRO - Tennessee River Option. A term used in barge freight trading giving the buyer the option to go to Tennessee River destinations.  2011 Grain Service Corporation Version 11

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TRQ – "Tariff Rate Quota." A TRQ is a 2-tiered tariff. There are 3 components: (1) a quota, (2) "in-quota tariff", and (3) "over-quota tariff." The "in-quota" tariff is applicable on some defined quantity of imports. Additional imports are allowed, but at a higher "over-quota" tariff. Tariff rate quota is interchangeable with term "tariff quota." TRQs do not limit import quantities, as opposed to a standard quota which precludes imports above a defined quantity. (See "Tariff Rate Quota", "TRQ Administration" and "Cupos.") Reference: http://www.ers.usda.gov/Briefing/WTO/trq.htm TRQ ADMINISTRATION – TRQ administration is the process of determining who shall receive the right(s) to import at the lower in-quota tariff. This is important because this can affect trade volume and distribution, an area in which the WTO is involved. Methods include TRQ auction(s), FCFS ("first come, first-served"), license on demand, historical allocation, and certain discretionary methods (such as by a designated government bureau). TWIN CITIES - Minneapolis & St. Paul, MN. A term used in barge freight trading to describe the Mississippi River north of McGregor, IA. (See “UPPER.”) TXG - (See “TEXAS GULF.”) UG(R)SA - Uniform Grain & Rice Storage Agreement. (Formerly UGSA). A contract between approved warehouse operators and the CCC, covering the receiving, storing and loading out of CCC-owned grain or rice (See “CCC.”) The warehouse regulations were rewritten in 2000 under the United States Warehouse Act of 2000. Reference: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=coop&topic=was-ug

ULTRA-LARGE CONTAINER SHIPS (ULCS) The capacity of this class varies according to the information source. Some sources quote 12,000 TEUs as ULCS, others say 15,000 to 18,000 TEUs. (See “TEU, SUPER-POST-PANAMAX”) UNDELIVERED - Grain sold but unshipped. UNDER (basis) - Negative, minus; less than zero. E.g., “The basis is now ten under November for harvest soybeans.” UNDERFILL - To ship less than a contracted quantity. Under NGFA Trade Rules, Rule 23 specifies how overfills and underfills on grain contracts shall be priced or cancelled. UNIT TRAIN A rail shipping unit typically consisting of 25, 50, 65, 75, 100, or 125 cars that move as a ‘unit’, typically with dedicated power (and not combined with other freight) on the larger unit sizes. (See also “BULLET TRAIN” and “SHUTTLE TRAIN.”) UNMERCHANTABLE - Grain that is unsuitable for trade. Often refers to grain that is contaminated.

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64 UNPRICED - Basis contracts on which the futures price has not been established. UNSETTLED - Grain that has been shipped (received) but not finally accounted and paid for. UNSHIPPED - (See “UNDELIVERED.”) UPPER (river) - The Mississippi River north of McGregor, IA. (See “TWIN CITIES.”) US GRAINS COUNCIL – A private, non-profit organization, the U.S. Grains Council develops export markets for U.S. barley, corn, grain sorghum and related products Reference: http://www.grains.org/ USNH - U.S. Atlantic ports north of Cape Hatteras. E.g., Norfolk and ports north. “USUAL TERMS” – An industry phrase sometimes used on trade confirms. Under NGFA Trade 1, “Usual Terms” in the confirmation shall mean that such terms and conditions that governed previous trades of a like character shall apply instead of the specifications described in Trade Rule 1. Indicates the parties agree their trade will be bound by terms and conditions they have used in the past, even though such terms may not be spelled out. VACUVATOR - Commonly known as a “vac.” A device used to move bulk commodities by using pneumatic power. Often used to clean up spilled grain from overturned rail cars and trucks, or to remove grain from certain vessels. VANILLA - As in plain vanilla. Standard (usual) trading terms. E.g., “In CIF corn, 15.0 moisture is vanilla.” VARIABLE STORAGE RATE – (See “VSR”) VAT – Value Added Tax. A tax levied on the value added that results from exchange. An indirect tax collected by a third party. VATs are usually not assessed on exports. VEGA – The change in the price (premium) of an option that results from a 1% change in volatility. VERSUS CASH - (See “FUTURES EXCHANGE.”) VERTICAL INTEGRATION - A company that operates at several levels in the production and/or marketing of a product is said to be vertically integrated. For example, a company that operates interior barge loading elevators, a barge company and an export elevator is vertically integrated in marketing export grain. The term may be used to describe the structure of a company or an industry. The term “financial integration” is sometimes used to describe common ownership at several levels without operational coordination between the levels. VERTICAL SPREAD - In options, to be long at one strike price and short at another. E.g., “I’m long 10 Dec 2.80 corn calls and short 10 Dec 3.20 corn calls.”  2011 Grain Service Corporation Version 11

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VOLATILITY - Generally, the degree of price change in a market. In options trading, refers to a specific measurement of past (historic volatility) or future (implied volatility) price movement. VOMITOXIN - A chemical mycotoxin (deoxynivalenol - DON) produced by Fusarium mold. Wet, cool conditions contribute to the development of Vomitoxin. Hogs are especially sensitive to Vomitoxin. Problems include vomiting, refusal to eat, and occasionally death. Vomitoxin can only be detected through chemical tests; it can not be seen or smelled. USDA allows 5 ppm in grain placed under price support. FDA advisory levels are 5 ppm for swine, and 10 ppm for cattle older than 4 months, and for poultry. (See “Fusarium” and “Fumonisin.”) Reference: http://archive.gipsa.usda.gov/newsroom/backgrounders/b-vomitox.PDF Reference: http://archive.gipsa.usda.gov/reference-library/handbooks/don/don_hb.pdf VSR – (See “Variable Storage Rate”) – A rule instituted by the CME/CBT in November 2009 that allows the daily storage rate on CBT delivery wheat shipping certificates to change based on a prescribed formula, effective July 2010. The storage rate on July 10 deliveries shall be $.00165 per day (5¢/mo est). Effective for September 2010 deliveries and beyond, the storage rate can rise or fall on each delivery cycle by either zero or 3¢ per bushel per month ($.001/day). Whether the rate changes is based on a formula that compares the actual front-month spread value to a calculated financial full carry, using the storage rate at that time, during a defined 45-day time period prior to the start of deliveries. For example, the storage rate for wheat for the Sept 2010 delivery cycle will be determined based on the average percent of full carry on the Sept/Dec spread during July 19 until Aug 27, 2010. Should the spread average 80% or greater of financial full carry during this period, storage on Sept certificates shall increase $.001 to a total $.00265 (8¢/mo) effective Sept 18. Should the spread average 50% or less of full carry during this period, storage shall decrease by $.001, but never to lower than $.00165 per day (~5¢/month).

Reference: http://www.cmegroup.com/trading/agricultural/grain-andoilseed/variable-storage-rate.html See also “KCBT Wheat Storage” – KC wheat does not operate under a variable storage rate, but KCBT has enacted other changes on their futures contract. WAM - A term used in CIF bean trading. Barges loaded on the White, Arkansas, or Missouri Rivers are non-applicable. Sometimes referred to as “single M.” WAMM - “Double M.” A term used in CIF bean trading. Barges loaded on the White, Arkansas, Missouri or Upper Mississippi Rivers are non-applicable. WAREHOUSE RECEIPT - A document representing stored grain. WHR’s are often negotiable instruments. WASH - To cancel open contracts. Usually involves settlements for price differences. E.g., “We were in a reseller circle, so we all washed out.” WEAK - A price or basis that is falling. E.g., “Harvest is coming, so the basis should weaken.”  2011 Grain Service Corporation Version 11 Rev

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WELLAND CANAL – The 27 mile, 8-lock ship canal that connects Lake Ontario and Lake Erie at Buffalo, NY. WET MILLING - (For ethanol). A wet mill plant steeps (soaks) corn in water to allow separation of the corn germ, oil, and starch. The products include ethanol, protein feed, gluten meal, CO2, and corn oil. Some plants can also promote high fructose corn syrup (HFCS). Wet ethanol milling plants are more costly to build, but have lower operating costs. (Source: Downstream Alternatives research project for the Dept. of Energy.) WHEAT - There are seven classes of wheat: Durum, Hard Red Spring, Hard Red Winter, Soft Red Winter, White, Unclassed, and Mixed wheat. (For descriptions of classes and key factors, see “DURUM,” “HRS,” “HRW,” SRW,” “DNS,” “MIXED,” “DHV,” “IDK,” “HWW.” Ref: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/world_crop_country.htm#northamerica WHITE WHEAT - A class of wheat. Subclasses include Hard White wheat, Soft White wheat, White Club wheat, Western White wheat. (See “WHEAT,” “HWW,” “SWW.”) WHR - (noun) Common abbreviation for Warehouse Receipt. (See “WAREHOUSE RECEIPT.”) WIRE TRANSFER - Transfer of funds between banks via the Federal Reserve Bank wire system. Since this only takes a few minutes, it is the fastest way to send “good funds” from bank to bank. WRITE - To sell options as an initial position. Writing options is comparable in concept to selling insurance coverage. Selling options to liquidate an existing long option position is not the same as writing options. WTO – World Trade Organization. The World Trade Organization (WTO) is an international organization dealing with the global rules of trade between nations. The WTO has more than 130 members, accounting for over 90% of world trade. Decisions are made by the entire membership. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO’s predecessor, GATT. Reference: http://www.wto.org WWDX - Weather working days excluded. Days that do not count toward free time due to poor weather. X - Refers to a point of origin or movement away from a basing point. E.g., “I bought 10 trains x-W. Iowa yesterday.” (see “EX.”) YGS - Trade abbreviation for yellow grain sorghum. (See “SORGHUM,” “MILO.”) YUAN – One term for the currency of China. The yuan is the base unit of the official currency, the ‘renminbi.’ The yuan floats, but currently only in a narrow band relative to the US $; in 2011 presently $1 is approximately 6.59 yuan.  2011 Grain Service Corporation Version 11

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Major References American Association of Railroads - http://www.aar.org Biodiesel Organization - http://www.biodiesel.org Chicago Board of Trade - Commodity Trading Manual Chicago Board of Trade Glossary http://www.cmegroup.com/education/glossary.html Chicago Board of Trade Rules and regulations http://www.cmegroup.com/rulebook/CBOT/index.html The Chicago Board of Trade Illinois Waterway Delivery System informational book CME Group - glossary http://www.cmegroup.com/education/glossary.html Commodity Futures Trading Association glossary of futures trading terms http://www.cftc.gov/opa/glossary/opaglossary_a.htm Dictionaries/Glossaries - online Downstream Alternatives, Inc.; Research project for The Department of Energy, on the logistics of significant expansion of the US ethanol program. (2002) Kansas City Board of Trade http://www.kcbt.com National Futures Association rules http://www.nfa.futures.org National Grain & Feed Association Trade Rules The Renewable Fuels Association ( www.ethanolrfa.org ) US Army Corps of Engineers river navigation Reference: http://www.ribb.com/index.php USDA/FGIS- official United States standards for grain “Wheat Facts “- from “The Wheat Grower,” sponsored by the CBOT, 1992. The Internet: Web sites on relevant topics (some are included via “reference” hyperlinks on such topics in this glossary.) Special note: www.usda.gov sites Some definitions are taken from authoritative sources, others are condensed explanations.

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Glossary updates: Version 11 modified March 201` ‘ Updated numerous links Asian Options Calendar Spread Options Dodd-Frank Legislation E-15 GASC GCC KC Wheat delivery storage OTC Renewable Fuel Standard 2 Variable Storage Rate (VSR) – CBOT wheat, updated

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Glossary updates: Version 10 modified March 2010 ‘ Updated numerous links Advanced biofuel Basis swaps Blend wall Biomass diesel Calendar swaps Cellulosic Biofuel CME Clearport EISA Feedstock(s) GHG Renewable fuel Renewable Fuel Standards 2 (RFS2) VSR (Variable Storage Rate).

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Glossary updates: Version 9 modified March 2009 ‘ Updated numerous links New terms: 2008 Farm Bill ACRE program Basis Repo CBOT updates: Delivery certs, Globex RIN Credits Straddle Strangle SURE program

Version 8 modified August 2007 Verified all links and updated them as necessary (including for USDA which completely revised their website; this version has all the new links) New terms: Acre-foot AGI (Adjusted Gross Income) American-Style options Backwardation Baie-Comeau Bulgar wheat CAFTA Carryover CIS Clearport® CME Group Commitment of Traders Containerized shipments Contango COOL Crop Year Delta-hedge EIA EU10 EU15 EU27 European style options FAO Farm Bill 2007 Fill or Kill Flood stage  2011 Grain Service Corporation Version 11

71 Fungigation (also “Directed Fungibility”) Gauge / stage ICE G8 Gamma Gauge (stage) GLOBEX Goldman Roll Groats Grocery Boat Hog/Corn Ratio Intramarket Spread Jatropha Liquidity NAIS (National Animal Identification Service) National Actual Revenue National Payment Rate National Payment Yield National Revenue Target OECD OPEC OPIS Phytosanitary PPN / Principal Protected Notes Rack Price RBOB Real “Repo’ (Repurchase agreements) Request for Offset Revenue-Based Counter-Cyclical Payments Side by Side SLED SPAN® Super Post Panamax TCE (Time charter equivalent) Test Weight Theta Tick Triticale Ultra Large Container Ships ULCS VAT Vega Welland Canal Yuan

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72 Version 7 modified January 2007 Add: GSCI/Goldman Sachs Commodity Index H5N1 Hedge Funds Index Funds Verified all links and updated them as necessary (including for USDA which completely revised their website; this version has all the new links) Version 6 A modified April 2005 Add: CBI CRB Mini-CBOT contracts Delete: certain USDA/FSA outdated phrases Updated numerous links or substituted better sources. Updated Mid America exchange One Chicago Security Futures

Version 6 modified February 2005 updated numerous links, clarified certain definitions

Version 5 modified November 2002 add: Abare APHIS B20 B100 Broad-based stock index Countercyclical payments Crotalaria Dwarf Bunt Farm Bill 2002 Fixed Direct payments GRP (Group Risk Policy) IP (Income Protection) Karnal bunt Narrow-based index Oil-World OneChicago Partial bunt Security Futures Single Stock futures RA (Revenue Assurance) Target Price (2002 Farm Bill) TCK upgraded with additional links on some existing terms, and all prior links were verified  2011 Grain Service Corporation Version 11

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Version 4a modified March 2002 add:

Biodiesel Cash against Documents Countercyclical payments Cupos Decoupled Fixed payments Dry milling "E10" "E85" Flexible-Fuel Vehicles Jones Act of 1920 Masa MSW Nixtamal PADD Payment Cap Post-Panamax Renewable Fuels Association (RFA) Shipping Documents Stream Days Tariff Rate Quota Three Entity Rule TRQ TRQ Administration Wet milling

Version 2b modified March 24, 2000 add:

Differential PCP Posted County Price

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Version 3 updated March, 2001 add: a/c/e Agenda 2000 AGMAS B2B BSE (“Mad Cow” disease) CAT Conasupo Cottonseed, cottonseed meal Crop Revenue Coverage Cry9C gene El Nino Eurex FCIC FMD Fumonisin Fusarium GSM IGC Intervention, Intervention Stocks La Nina MBM Merchants Exchange of St. Lois Mercosur MPCI MTBE NOAA Restitution RFG RMA SAFRAS Starlink

Updates: National Grain & Feed Assn. Trade Rules

plus updated internet links April 2001: page 43 amended "Takes" to adjust contracts/bushels reference

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