Total Continuing Professional Education (CPE) Credits: 16
This program is designed to help bankers better understand the risk associated with lending to agricultural producers looking to protect profit margins in their business. Appropriate for credit analysts as well as loan officers and upper management, this comprehensive two-day seminar encompasses a broad range of topics. These include a fundamental background of the futures market, the clearing and margining process, as well as position structure and management with various futures and options combinations and their cash flow implications. Reconciling derivative positions with physical contracts and understanding net exposure will be discussed to help better evaluate if hedge positions are truly reducing risk in the cash market.
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. A margin management simulation ties together the hedging concepts learned throughout the program and allows you to leave with fresh ideas on how to improve your decision-making process when working with producers.
Introduction to Risk Management and Protecting Profit Margins: (2 CPE Credits)
Explains the importance of why agricultural producers should model their forward profitability and use contracting alternatives both in the cash market as well as the futures market to secure margins. Profit margin discovery will be discussed along with how margins change over time and why it is often optimal to contract well ahead of a physical marketing period in order to secure favorable margins.
Cash Market vs. Futures Market: (2 CPE Credits)
The difference between direct contracting in the physical market and using exchange-traded contracts will be discussed along with basis, risk exposures, and how different contracts can complement one another across the two markets.
Futures vs. Options: (2 CPE Credits)
A basic review of exchange-traded contracts including definitions, specifications and features along with trading mechanics, clearing, and margining topics.
Margin Requirements and Projections: (1 CPE Credit)
Discussion of performance bond requirements including both initial and maintenance margin commitments that must be pledged to hold positions in the market. Estimating potential variable margin requirements through stress-testing and its impact on cash flow will be reviewed to help determine the impact on a line of credit.
Roles, Relationships and Risks: (1 CPE Credit)
Review of FCM clearing and account control agreements, trade execution, account funding and the responsibilities of various parties involved in the hedging process.
Position Reconciliation: (1 CPE Credit)
Matching open and closed position P&L to physical purchases and sales, and how to determine net exposure between cash market and futures market.
Core Strategies: (2 CPE Credit)
Basic exchange-traded structures to manage the risk of both higher and lower prices will be reviewed, including how these strategies typically complement physical contracting already committed to in the cash market.
Core Strategy Adjustments: (2 CPE Credit)
Making position adjustments to address risk, margin exposure, or to take advantage of opportunities as prices change over time.
Price Management Simulation: (3 CPE Credits)
Through an interactive format, participants are guided through an actual historical market case study in an online hedging simulation to reinforce the topics built from the previous training. Each participant will receive their own computer and position analysis software, and make price management decisions incorporating both futures and options strategies to manage the risk of an agricultural producer’s profit margin over time through several decision periods.
Starting with a fixed budget to fund hedging activities, participants will have to manage their positions over time and price to both optimize profit margin and control margin exposure through the simulation.
Registration fee includes continental breakfast, lunch, dinner reception the first night and all seminar materials.
Notice of cancellation must be received by 05/14/2014. Cancellations received after 05/14/2014 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
If you prefer to enroll by phone,
please call 1-866-299-9333.
May 28th – May 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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