Total Continuing Professional Education (CPE) Credits: 16
This program is designed to help crop producers develop a marketing edge for their operation by managing their profit margin. Appropriate for all experience levels, this comprehensive two-day seminar encompasses a thorough review from fundamental background of the futures market–including terminology, order flow and margining topics–to position structure and management. The seminar also covers futures and options strategies that allow complete flexibility to optimize the profit in the operation.
A tour of the CME Group’s visitor center overlooking the trading floor at the Chicago Board of Trade building is included. This will help reinforce the knowledge of why the markets exist and how they function. An online price management simulation ties together the hedging concepts learned throughout the program and allows you to leave with fresh ideas to improve your operations returns.
Introduction to Futures Markets: (2 CPE Credits)
Explains why futures markets exist and provides background and terminology related to the futures industry. Describes how an order is processed, why the margining system is important to the integrity of the exchange, the role of the Clearing Service Provider and how the futures industry is regulated.
CME Group Tour: (2 CPE Credits)
Thousands of contracts worth millions of dollars are traded every day on the floor of the CME Group. Market orders are placed and filled from all over the world in seconds. Participants will have the opportunity to tour the visitors’ gallery of the exchange during trading hours and see live trading take place.
Composition of Price: (2 CPE Credits)
With a background understanding of why the market exists and how it works, we move on to address the relationship between the futures price and the physical commodity price (cash price). An understanding of the relationship between futures and the cash price leads to why informed price management would be beneficial to a crop operation.
Contracting Choices: (1 CPE Credit)
Illustrates different methods to price or take title to a commodity. Elevators and processors offer various alternatives: basis contracts, cash forward contracts, and other types of cash contracts. Futures and option strategies can be very complimentary to cash contracting methods. The obligations, benefits and considerations of these choices are also discussed.
Managing Price with Futures: (1 CPE Credit)
This section clarifies the use of futures in conjunction with an understanding of basis. Provided are examples of the different applications of futures from the short hedger (pre-sale) and long hedger’s (post-sale) point of view. The training then transitions into a simulation that reinforces an understanding of basis and futures to establish the price for a commodity.
We will conclude the day with practical examples which include variable margin required to maintain a hedge position.
Managing Basis Risk: (2 CPE Credits)
While futures can be used as a substitute for a cash purchase or sale to eliminate the element of price risk in the physical market, the basis differential between the cash price and the futures price remains a floating variable to the final determinant price and is itself exposed to adverse variation in its value between the time the futures are hedged and the time the hedge is removed and the cash price is set in the local market. Can we use the futures market to manage basis risk? Here we will look at the practice of using futures spreads to manage this component of risk from both the buyer (post-basis sale) and seller (pre-basis sale) perspectives.
Introduction to Options: (2 CPE Credits)
Emphasizes how option strategies can provide valuable flexibility to a pricing decision. What exactly are options? Calls and puts? How are they priced? How are time value and intrinsic value calculated for a given option? What rights and obligations do buyers and sellers of options have? If exercised, what futures positions will one assume? This section builds a solid foundation of option concepts that allows for effective use of these pricing tools.
Price Management with Options: (2 CPE Credits)
Options offer hedgers a myriad of strategy choices. This section facilitates the comparison of mathematical outcomes of one choice versus the other for effective decision making. Participants learn how to calculate profits and losses on futures, a long call, a long call spread, a short put, and long call/short put combinations. This section summarizes a wide variety of strategies including their implications, advantages and disadvantages.
As a group, we will work through examples using a full array of contract alternatives to illustrate the development of a hedge position and the process of offsetting positions and setting physical prices.
Price Management Simulation: (2 CPE Credits)
Through an interactive format, participants are guided through an actual historical market case study that reinforces the topics built from the previous training. The attendees are grouped into teams representing unique crop production operations.
Each crop production entity will be equipped with their own computer and position analysis software. Team members will collaborate to make price management decisions over several different time periods to manage their crop production through the growing season. The teams ultimately share their strategies and the rationale behind their decisions.
The trainer interacts with the teams throughout the simulation to answer questions, offer guidance and ensure maximum understanding for all team members. The session concludes with a thorough review and summary of the decisions to further emphasize the opportunities and implications of the various hedging alternatives and strategies.
Registration fee includes continental breakfast, lunch and all seminar materials.
Notice of cancellation must be received by 08/14/2012. Cancellations received after 08/14/2012 are subject to a $100 administration fee. Note that you may substitute enrollees to avoid scheduling conflicts.
For more information regarding refund, compliance and/or program cancellation policies, please contact our office at (312) 596-7755.
Commodity & Ingredient Hedging, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasba.org
Watch Crop Producer, Craig Klinge of Crothersville, IN discuss why CIH’s Crop Margin seminar has helped him make better marketing decisions.
If you prefer to enroll by phone,
please call 1-866-299-9333.
Aug 28th – Aug 29th
8:30 AM to 4:30 PM Daily
Participants will be introduced to the mechanics of the futures and options markets and the terminology related to the futures industry. Participants will also learn how to utilize risk management strategies to manage commodity price risk.
175 West Jackson Blvd., Suite 1760
Chicago, IL 60604
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