In The News
Seminar to help manage pork margins
by Marlys Miller, Pork Magazine Dec 20, 2011
A pork producer’s risk management strategy can make the difference between a loss, a modest profit and a healthy one. Whether you’re new to the game or a seasoned veteran, the educational process is an on-going one. To assist with that effort, Commodity & Ingredient Hedging is providing a two-day seminar on Feb. 8-9, in Chicago. The sessions will run from 8:30 a.m. to 4:30 p.m. on both days. Read Complete Article »
2012 Outlook: Carefully Manage Forward Profitability
by Chip Whalen, Progressive Dairyman, November 1, 2011
Profit margins for dairy producers have remained relatively steady over the past few months since our last update in July. While the forward margins themselves have not changed much, movement in the individual markets has been significant. From a historical standpoint, margins remain below average within the context of the past five years, although they are positive through Q3 of 2012. Given this outlook, it will be important for producers to carefully manage their forward profitability such that they preserve a positive margin without giving up the opportunity to participate in stronger returns should that materialize over time…Read Complete Article »
Margin management: Betting farm not conservative
by Chip Whalen, Western DairyBusiness, August 10, 2011
There is a belief among a segment of dairy farmers that being “conservative” means avoiding the use of futures and options. This belief is well-intentioned and understandable, but misguided. The dairy farmer who runs his farm as efficiently as he can, and then sells his milk for the best price he can get is taking on a great deal of risk in his operation. No matter how hard, smart and effectively he works, he cannot control all of the factors involved in his business…Read Complete Article »
Profit Margin Outlook Strong Through End of 2011
by Chip Whalen, Progressive Dairyman, August 1, 2011
Dairy producers have continued to see favorable profit margins since the end of the first quarter. While feed costs have been climbing, this has been more than offset by higher milk prices so that the overall profit margin has held steady and even managed to improve through the second quarter of 2011. This certainly is a welcome development as dairymen struggle to build back lost equity over the past few years in what has been a brutal period of negative margins for the industry. While projected profitability through the end of the year may not necessarily hold up as we move through the summer and fall, positive margins can nonetheless be secured right now and look particularly attractive in nearby Q3 which is at the 88th percentile of the past five years, compared to the 59th percentile at the end of the first quarter…Read Complete Article »
Profit Margin Outlook and Strategic Margin Management
by Chip Whalen, Progressive Dairyman, February 3, 2011
This past year has certainly been one many dairy producers would just as easily like to forget. After a brutal year in 2009, profit margins remained negative through most of last year with depressed milk prices and high feed costs crippling operations. Increased debt loads and lost equity have been the themes as many dairymen are simply trying to weather the storm and survive this current cycle. After the past couple of years, one has to wonder if thing…Read Complete Article »
Hedging Margins
by Dan Looker, Successful Farming, November, 2010
Norm Brown, who farms about 1,500 acres near Aledo, Illinois, and finishes 40,000 hogs a year, is fine-tuning the goal of every farmer—making a profitable margin. For decades, soybean processors have locked in crush margins between the price of beans and oil. Commercial feedlots hedge cattle and corn. Since July, Brown has been using Commodity & Ingredient Hedging, LLC, in Chicago to help him decide exactly when to make those tough decisions….Read Complete Article »
Profit Margin Outlook Remains Poor for Dairy Next Year
by Chip Whalen, Progressive Dairyman, November 1, 2010
With the exception of the spot period for nearby Q4 2010, the forward profit margin outlook for dairy producers is unfortunately poor as negative returns are reflected throughout next year. In our last installment of this margin outlook in July, forward profit margins in 2011 were still projected around a breakeven level through the first half of 2011, although this has since changed as forward values of feed costs and milk have diverged over the past few months…Read Complete Article »
Rising Bacon Prices Squeeze Chicago Restaurants
by Brigid Sweeney, Crain’s Chicago Business, September 6, 2010
Brian Huston, the chef de cuisine at West Loop restaurant Publican, features 11 pork-based dishes on his dinner menu. This may delight meat-loving customers, but it’s been bad for the Publican’s bottom line lately. The wholesale price of pork bellies, the underside of the hog that gets cured and sliced into bacon, has surged by 90% in the past year…Read Complete Article »
Options for Margin Management
by Chip Whalen, Progressive Dairyman, May 1, 2010
Since the last time we explored forward dairy production margins in the February 9 edition, much has changed in the market both for milk prices and feed costs. On a positive note, feed costs have held steady and are under fundamental pressure from larger crop estimates out of South America, as well as indications that acreage will be higher in the U.S. this spring. Moreover, domestic demand over the past quarter has not been as strong as previously expected. Unfortunately, milk prices have dropped sharply since mid-January, more than offsetting all of the benefit gained from steady to cheaper feed prices…Read Complete Article »
Manage the Margin to Protect Profitability
by Chip Whalen, Progressive Dairyman, February 9, 2010
The volatility in both milk and grain futures has no doubt been unsettling for many dairy producers worrying about their profitability this year following what has been a very challenging time in the industry the past two years. Fortunately, the recent movement in prices represents an excellent opportunity to take advantage of forward profit margins that have improved significantly as a result of both lower feed costs as well as higher values for milk. Looking at the Figure 1 of nearby profit margins for first quarter 2010, you can see that current profits of around $0.43 per hundredweight…Read Complete Article »
Dairy Margin Outlook and Strategic Risk Management in 2010
by Chip Whalen, Progressive Dairyman, November 2, 2009
There has been much talk about the lack of profitability among dairy producers lately, with milk prices below most operators’ cost of production. The negative profit margins have certainly put quite a bit of strain on the industry for the past year and led to a new round of the CWT’s herd retirement program in an effort to further reduce production and boost prices. What is lost in this discussion is the fact that profitable margins for all of this year could have been locked in well ahead of when profitability began to deteriorate during Q4 2008. Before looking at these opportunities, let’s take a step back and explore the concept of a dairy producer’s profit margin first…Read Complete Article »
CIH Opens New Des Moines Office
Business Wire, October 1, 2009
Commodity and Ingredient Hedging, LLC (CIH), a provider of commodity price and margin management consulting services, today announced a new office located in West Des Moines, Iowa. Starting October 1, CIH will be open for business at 4401 Westown Parkway, with a team that combines expertise from Iowa and consultants from the company’s current headquarters in Chicago… Read Complete Article »
NU Picks CIH For Risk Management Expertise
Star Tribune, September 24, 2009
CIH today announced a collaboration with Northwestern University’s School of Continuing Studies to instruct a course on managing risk through hedging. The four-week course, entitled “Basics of Hedging Using Futures and Options”… Read Complete Article »
Could a profit margin for this winter still be available?
by Chip Whalen, Progressive Dairyman, July 21, 2009
The concept of a margin is not new. Simply put, revenues minus expenses equal the operating margin of a business. Many dairies do not look at their enterprise in margin terms. We assert that following a margin approach can significantly improve your dairy’s profitability and help your business through the inevitable lean times, such as we are experiencing right now, that are part of any cyclical industry… Read Complete Article »
Commodity and Ingredient Hedging Releases Upgrade to
Dairy Margin Management Service
CBS 2 Chicago, June 3, 2009
Commodity and Ingredient Hedging, LLC (CIH), a provider of commodity price and margin management consulting services, today announced the release of a significant upgrade to its Dairy Margin Management web site. The web site plays an important role in CIH’s comprehensive consulting service designed to help U.S. milk producers manage profit margins…. Read Complete Article »
Amid Swine Flu Fears, the Pork Market Falls III
by Ari J. Officer, TIME, May 5, 2009
Swine flu, recently renamed H1N1 virus, is causing a swoon in pork prices. The Lean Hogs futures contract, traded on the Chicago Mercantile Exchange (CME), is down more than 10% since news of the potentially imminent pandemic first broke. The CME’s Frozen Pork Bellies futures contract has suffered comparable losses… Read Complete Article »
Making Money in a Down Market
by Joe Vansickle, Senior Editor, National Hog Farmer, March 15, 2009
Without a risk management program, the Becker family of Fairmont, MN, admits they wouldn’t have made money on hogs in 2008. “The last couple of years, our risk management program has made our production enterprise profitable. Because the cash market for hogs has been so lousy the last couple of winters, and we protected a profitable margin in our hedge account, the hedges more than offset our losses on the production side,” says Lynn Becker, past president of the Minnesota Pork Board… Read Complete Article »
An Interview with David Ward, Senior Risk Manager
by Dave Russell, Brownfield Network, November 19, 2008
Dave Russell talks with David Ward, Sr. Risk Manager for Commodity & Ingredient Hedging, LLC in Chicago about helping producers and companies manage risk…. Listen »
Customized Program Manages Pork Profits
by Joe Vansickle, Senior Editor, National Hog Farmer, April 15, 2002
Usually, pork producers excel at production. Seldom do they take the same amount of time or resources to track and manage their operation’s overall profitability. They often find themselves at the mercy of suppliers or packers with little room to negotiate their financial position…. Read Complete Article »
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