For the purposes of this report, I analyzed the July corn futures market from a long position in contrast to my short position in the cash market. I took out one contract with a size of 5000 bushels of corn. I tracked this market since January 16th and collected futures and cash market prices throughout that whole period. In addition, I also analyzed hedging with futures and hedging futures with options dating back to February 21st. This report shall cover all aspects of this analysis including a compare and contrast section on each of the net prices from each hedging option.
To begin with, I analyzed buying a futures contract on February 21st to offset my risk associated with just the cash market. With this analysis, I maintained a margin
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My cash market, and its values, are based on Key Cooperative’s Story City, Iowa location. When I started this futures hedge, on February 21st, the most currently recorded cash price was 328. Fast forward roughly two months to April 14th, the cash price was 321. This gives me a net buying price of seven cents. Oddly enough, this was my best option in comparison to my two futures options which I shall explain a bit later. I believe this drop in prices is due mainly to the fact that we still have surplus of corn in the area and that there hasn’t been enough planting done in the local area to know if the USDA predictions will hold true in the local area. That is, that there will be less corn acres planted from a year ago to help with the current corn surplus. Being short in the cash market, means that I want to market to go down. This is because I have a cattle operation that I am constantly buying corn for. If I were to buy 5000 bushels of corn, which is what my futures contract was for, I would have had a net gain of 350 dollars compared to the February 21st cash price. This 350 dollar gain would have saved me money on my feed costs which in return I would have gotten back in my net profit when I sold the …show more content…
On February 21st, I bought a call option at 3.90 for a premium of .19125 cents. After following this market up until April 14th, when I closed this market, my net buying price would have been 3.30125 dollars per bushel. This price is nearly ten cents over the buying price in the cash market and roughly five cents over the net buying price in just a futures hedge. This net buying price is obviously because the strike price was more than the futures price was at the end of the hedge so I choose to not exercise this option. Had I chosen a strike price that was lower than the current futures value, then I could have exercised this option and potentially made money. Looking back, I should have purchased an option lower than 3.80 as I would of potentially made money with my option. However, at the time I wasn’t sure as to what I was doing and thus made a poor decision on my strike price. I suppose I can chalk that up to a lesson well
Everyone may know about pop corn, the best snack item. It is mostly known as a refreshment item, but it has some benefits to deal with health. As you know about benefits of pop corn, you will immediately buy it. Usually, whole corns have health benefits. Particularly, pop corn has various health benefits. Only few corns offer easy preparation method. Pop corn is one of those corns. While corn makers are there to further simplify preparation process, you should not wait to buy it. You have to just buy the best pop corn maker. After reading reviews, you will come to know about best maker to pop corn.
Many Americans live and die by the saying “time is money.”. In the essays, Industrial Corn by Michael Pollan and “From the Frying Pan Into the Fire,” by Arlie Russell Hochschild the statement “time is money” is widely portrayed. They both write about how people want to be as effective and timely as possible. Both of these essays show that people demonstrate and are influenced by capitalistic ideas, especially that of efficiency in their daily lives. In Hochschild’s essay, she ventures into how capitalism influences Americans through her perspective on an Quaker Oats cereal commercial she analyzes. In Pollan’s essay, he describes how the influences of efficiency have changed the production and uses of corn throughout America. As America has transitioned to becoming increasingly
Maize or corn is a domesticated plant of the United States. The Native Americans founded it and it quickly spread to other parts of the world. The Native Americans transformed maize by carefully cultivating. Maize developed from a wild grass called Teosinte that originally grew in Southern Mexico, 7,000 years ago. The Teosinte kernels looked completely different from the kernels of today’s corn or maize. Teosinte kernels were small and separated from each other. The first cobs of corn were only a couple inches long with only eight rows of kernels. The cobs eventually started to grow and increases the yields of the crops. Maize agriculture did not reach Southern New England until a thousand years ago.
As a consultant for Thomas Foods and it is my job to develop hedging strategy to mitigate the risks associated with any unexpected increase in price they would have to pay farmers for their harvested crops. It is important to note that risk is an unavoidable fact of business life. Also, the strategies developed to mitigate risk can often determine the success or failure of a business. There are several mechanisms that are used for such transactions that can involve futures contracts, short sells and rate swaps, among other more exotic positions. There is specific set of guidelines that needed to be set as a consultant. My first initial thought will be the risk to be hedged; that is interest rate and commodity price
Monsanto's Round-up ready corn was genetically modified to kill bugs by busting there stomach open and gust to spill. When the ingredient used was Bacillus thuringiensis. People from North America were suffering from autism and diseases that were unknown and intestine damage that was a big loss. Some organisms in the US. But there was still pigs, cows, and smaller mammals like rodents and hamsters.
Purple corn is a Peruvian superfood with more antioxidants than blueberries. This corn contains many phytonutrients including large amounts of polyphenols and anthocyanins, which protect the blood vessels. Studies show that plants with high anthocyanins and phenolic constituents have the highest antioxidant activity. Anthocyanins are a type of complex flavonoid that plants give a blue, purple or red. Anthocyanins are acting anti-inflammatory and stimulate the regeneration of connective tissue.
One of the biggest conflicts in Where The Red Fern Grows is Billy's love for puppies and the amount of money his family has. Billy's family is extremely poor and Billy is at the age where he wants coonhounds to go hunting. Not only does Billy want one coonhound, but he wants two. Billy begs his parents to get him his dogs, but they say no because they do not have enough money. When Billy hears this news he is crushed, that does not stop him from getting his dogs. Billy took this matter into his own hands and started saving up enough money to buy the two dogs. The pups cots 25 dollars each so he had to save up 50 dollars in total. Earning this money took him two long years of hard, exhausting work. An example from the text that supports the
As American farmers use 97 million acres of land for corn production, how much of it is used for food? In 2013, the answer was a disheartening 15%, according to James Conca in his Forbes article. But where does the remaining 85% go; to ethanol production and livestock feed. The crop that literally dominates the landscape of America doesn’t even produce a significant amount of food! Corn fails to provide us with a substantial reason to keep producing it at the same rate, and in addition its continued production has caused vast environmental and economic damage.
Farmers Markets are a great summer tradition, but we visited our local Farmers Market to help get us ready for fall. We decided to send one of our employees down to the market to get us ready for fall Here’s what she discovered.
If there is a corn farm there are less animals, people & a variety of other crops due to innovations, gov’t nudging lowered corn prices, & more factory farmed animals.
Falling commodity prices test purchasing strategies and lead to questions about whether to lock in prices or adopt a wait. In other words, should investors be a buyer of the asset class or seller?
Current prices are listed and the current value of the cash portfolio representing purchasing costs at these prices is $-2,376,547.00. The portfolio values are most commonly thought of as positive values that include both revenue and input cost components. In Case 1, however, the portfolio is made up of only purchasing input cost components, without regard to revenue. Henceforth, the negative portfolio represents future expenses, and the risk considered is that input prices will increase, resulting in higher costs of purchasing. In the hedging strategies implicate forward or futures contracts, the current value of the cash portfolio is equivalent to Wo, the initial portfolio value, because the current values of entire futures contracts and forward contracts at initiation are zero. When lengthy positions in options are used, the premiums represent a primary outlay of funds that is added or subtracted from the current value of the cash portfolio in the equation for the primary portfolio value
The Farmer’s Market that I chose to visit for this project was the Douglas Farmer’s Market in Douglas, Wyoming, which is my hometown. It is in Jackalope Square, a small area in downtown which serves as the town square. The market runs from the start of summer through the end of September in the small town. At a given time, there are approximately 50 to 75 people at the market.
This research paper will interpret the United States sugar industry protections within Macroeconomics insights. The sugar industry in United States consists principally of sugarcane and sugar beets production. The country is ranking in the fifth place in the world consumer and the major production of the product (US Sugar, 2017). The greater concentration of crop sugarcane it is in the State of Florida, followed by the states of Louisiana, Texas and Hawaii, and the sugar beets crop are in the states of North Dakota and Minnesota (The Economic, 2011). In addition, there are rules and statutes in order to the United States meets the standards to produce, imports, sale and consumptions of the traditional sweetener, which are the policy quotes,
Swap is defined as an agreement or contract between counterparties for the purpose to manage their exposure to risk. Our paper will specifically discuss about one of the commodity derivatives called as Agricultural Swap and referring to the the Agriculture Swap Contract Product (ASC) Disclosure Statement issued by Westpac Banking Corporation dated in 10 February 2016. The main purpose of entering into Agricultural Swap is to manage the exposure of the agriculture price’s movement by locking the price of the agriculture for a long period (Barned 2012). Agriculture seller or buyer is entitled to exchange a floating price for a fixed price for a specified commodity (Westpac Banking Corporation 2016).