What is a Stock Swap
Updated over a week ago

Relevant to: Buyers (unmanaged site only)
Navigation Tree: Transactions > Orders > Create Order

A Stock Swap occurs when, for whatever reason, a buyer's inventory cannot be moved to a different site under the same bulk handler (aka Site Operator).

The bulk handler will, instead of moving the inventory, offer the buyer ownership of inventory at the new site in exchange for ownership of the inventory that the buyer wanted to move. Ownership of inventory changes at both sites without any physical movement occurring (no outturn, receival or freight fees).

The inventory given to the buyer at the destination site can have a different value from the original inventory. This disparity is called the "Swap differential".

This differential can be a positive or negative number. If positive, the buyer will pay the bulk handler. If negative, the bulk handler will pay the buyer.

The formula used is: Value of Destination Inventory - Value of Origin Inventory = Swap Differential

A buyer has created an order, to transfer his inventory from one site to another, and agrees that the product can be transferred via a Stock Swap. To establish the differential, the buyer and bulk handler must negotiate the value of the two inventories (done outside of AgriDigital). Let's assume the origin inventory (OI) is worth $200/mt and the destination inventory (DI) is worth $190. In this case, the bulk handler must pay the buyer the difference in value of $10/mt.

In the AgriDigital system, the OI leaves the buyer's inventory stack for that site-grade season, while the DI is added to the inventory stack at that site-grade-season when the buyer creates a delivery that references the previously mentioned order.

See How to Create a Stock Swap to further learn about this process

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