Articles

Manage Your Margins

by Larry Stalcup, Corn & Soybean Digest, October, 2013

With new-crop corn potentially dipping below $5, there are fears $4 could be nearby. That signals storing unsold grain, or backing up sales with call options to capitalize on price rallies, says Gavin McPherson, consultant/analyst with CIH in … Read Complete Article »


Know Your Pricing Opportunities with Futures

by Chip Whalen, Progressive Cattlemen, October, 2013

When analyzing projected forward profit margins for cattle feeders, it is important to distinguish between opportunities based upon cattle that have already been placed in a yard versus potential opportunities for cattle that may be placed in the future but have not yet been purchased at auction… Read Complete Article »


Managing Margins as Important as Managing Price

by Larry Stalcup, Calf News, August 14, 2013

Bo Kizziar has seen it all when it comes to marketing cattle. As a long-time feedyard manager, he’s dealt with packer buyers, this grid and that grid, and traders on Chicago Mercantile Exchange floor. He’s now on a new venture to assist others with managing margins… Read Complete Article »


Price Outlook Remains Hopeful into 2014

by Chip Whalen, Progressive Dairyman, April 11, 2013

As the first quarter of 2013 comes to a close, the outlook for dairy producers remains extremely hopeful for the balance of the year into early 2014 as forward margin projections are very strong. In fact, from a historical perspective, current price levels project profit margins … Read Complete Article »


Feedlot margins largely mixed

by Chip Whalen, Progressive Cattleman, April 1, 2013

Feedlot margins for finishing cattle have been largely mixed over the past few months, although one particular dynamic has been featured. Margins for animals already on feed remain much more depressed compared to deferred margins, where feeder cattle contracts have yet to be… Read Complete Article »


Managing Forward Profitability

by Chip Whalen, National Hog Farmer, January, 2013

Hog producers face another challenging landscape in 2013, with costs projected to remain high through the balance of the current crop year. As most producers are well aware, feed expenses have been the principal driver behind soaring production costs over. …Read Complete Article


Feedlot operators may see options with the ‘crush’

by Chip Whalen, Progressive Cattleman, January 1, 2013

Cattle finishing margins have been largely flat over the past few months, with limited deviation in the price of corn, feeder or live cattle contracts on the CME Group. On a positive note, margins are projected to be positive throughout 2013 based upon current price levels, although feeder cattle availability will no doubt…..Read Complete Article »


Feedlot operators may see options with the ‘crush’

by Chip Whalen, Progressive Cattleman, October 1, 2012

Cattle producers, like other livestock integrators, have had a difficult landscape to navigate recently. Last year’s drought that ravaged pasture conditions across the U.S. Southern Plains created widespread hardships for backgrounders and feedlot managers alike. If that was not bad enough, this year’s version of the drought that spanned the heart of the Corn Belt in the Midwest has led to the largest yield loss since 1988, with the damage still being tallied…..Read Complete Article »


Where’s Your Focus?

by Chip Whalen, Western DairyBusiness, September 1, 2012

Dairy producers are certainly struggling right now with negative operating margins as a result of soaring feed costs. This year’s historical drought has taken a big toll on dairies across the country, as searing heat and a lack of rainfall has not only impacted pasture conditions and yield prospects for the corn and soybean crops, but has also….Read Complete Article »


Q2 Opportunities Gone but Others Still Available in Late 2012

by Chip Whalen, Progressive Dairyman, April 1, 2012

Dairy producer profitability deteriorated sharply over the past few months as milk prices plummeted while feed costs increased. Where the market was projecting a positive margin for nearby Q2 at the beginning of the year, the open market margin for that period is now negative. Moreover, the projected profitability has moved from a very high historical value above the 90th percentile of the past 10 years to below the 10th percentile between mid-January and early March—a nearly $4-per-hundredweight (cwt) drop….Read Complete Article »


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 »


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