The U.S. has the most extensive storage and transportation infrastructure in the world. With wheat shipping from the Pacific coast, the Atlantic coast, the Gulf of Mexico and the Great Lakes / St. Lawrence Seaway, the purchase and sale of grain is only part of the importing process.
There are three types of contracts under the U.S. marketing system: C&F, CIF, and FOB.
- C&F (Cost & Freight): Seller provides the cargo, covers the loading costs and charters the ocean vessel for a specific destination. The buyer must pay for insurance and for discharge of the grain from the vessel. Buyer specifies shipment period.
- CIF (Cost, Insurance, Freight): Seller provides the cargo, covers the loading costs and charters the ocean vessel, plus insures the cargo until it reaches its destination. Seller determines the final loaded quantity within the contract quantity tolerance; the buyer pays for discharge. Buyer specifies shipment period.
- FOB (Free on Board): Seller is responsible for placing grain at the end of the loading spout. Buyer is responsible for providing the ocean vessel, and for all other costs after the grain is delivered on board, including stowing and trimming the cargo in the holds. Buyer determines the final loaded quantity within the contract quantity tolerance. Buyers specify delivery period.
Bulk grain is usually sold on an FOB basis. Buyers of less-than-shipload quantities or those wishing to avoid the complications of chartering vessels may prefer to buy grain on C&F or CIF terms.