412 - Agricultural Commodities Marketing - Material
Folks, I am back from travel. But I have not had a chance to grade PS2 twice or Quiz 4 once. I grade assignments twice to be careful. So, plan on reviewing Problem Set 2 on Monday 10/18 and bring any questions about Quizzes 3 & 4. We are wrapping up the hedging and management part of the course. And will start the market analysis portion today 10/15next. Plan on completing Exam 1 late next week and it will be administered through Canvas and the LockDown Browser.
So the Fed met earlier this month and released the summary of their economic projections. Give a read fomcprojtabl20210922.pdf. There are a number of things impacting the overall market stocks, bonds, cash, real estate, and commodities. What the Fed thinks and what the market thinks is important for price discovery.
On-campus students: deadlines for assignments are posted with that assignment.
Online students: adhering to the assignment deadline is appreciated and needed. The absolute deadline is the day the assignment is returned, reviewed in class, and that lecture is posted to ECHO360.
Commodity Market Trading Experience AREC 419 Syllabus New Course Spring 2022 The course has been approved and will be in the CSU system...
When you send me an email please make sure the subject line leads with AREC 412:... and provides a topic.
All students on-campus and online please read the following:
If you need to email me an attachment then please do two things. First, if there are multiple files then zip them into a single .zip compressed file and send that. (Left click on the multiple files, then right click, choose Send To, and choose Compressed (zipped) Folder. Second, always use the following file naming convention, AREC 412 AssignmentName&Number YourLastName. For example, Quiz 3 becomes AREC 412 Quiz 3 YourLastName.pdf. (Please dont send me a document named, for example, Quiz 3.pdf.)
WSJ Reading Suggestions...
The link to the WSJ website to sign-up for the paper is below. It is unique to AREC 412 so Ill know when you subscribe.
https://r.wsj.com/PROFc7nt Use the link here.
Again, this is the unique link for AREC 412 at Colorado State University and the reading the WSJ is required so please use it.
Extension Travel/Meeting Days these are potential Class Cancelled Days
Historically, during the Fall Semester I have a predictable set of meeting where I deliver market outlook to extension audiences. This year some of the meetings will be virtual and might be through the afternoons. If the meeting is during class time then I will cancel the class meeting and record a make-up video.
October 11-14 (T&W&Th) Alamosa & Rocky Ford & Akron, CO @ Ag Lender Meeting 2 cancelled classes
October ? (?) Denver, CO @ Industry Outlook Conference virtual so no class impact
October ? (?) Denver, CO @ Colorado Department of Agriculture Outlook Committee Meeting virtural so no class impact
November ? (?) Rocky Ford, CO @ Arkansas Valley Land & Water Symposium potential cancelled class
November 16 (T) Akron, CO @ Colorado Crop Insurance Meeting no class impact
Syllabus and Survey
AREC 412 Syllabus - 8/23
AREC 412 Lecture A Introduction - 8/23 (If I update material then Ill put a new date on it.)
AREC 412 Lecture B Institutions 8/25
CBOT Corn Futures Price Quotes notice the time & settlements were found in class
CME Rulebook Chapter 101 & Chapter 102 These are resources only so do not print them.
CME Products Traded
AREC 412 Lecture C Price Discovery 9/8
dlr 08-18-2021 dlr 08-23-2021 August 2021 Cattle on Feed Report discussion pre-report & post-report discussion
dlr 07-01-2021 June 2021 Acreage Report discussion pre-report & post-report discussion.
dlr 06-23-2021 dlr 06-25-2021 June 2021 Hogs and Pigs Report discussion pre-report & post-report discussion.
dlr 04-01-2021 March 2021 Prospective Plantings Report discussion pre-report & post-report in same newsletter
dlr 07-02-2019 June 2019 Acreage Report discussion pre-report & post-report in same newsletter This years report was a good teaching example.
dlr 04-01-2019 March 2019 Prospective Plantings Report discussion pre-report & post-report in same newsletter
TBR-Feb TBR-Mar TBR-Apr TBR-May TBR-Jun TBR-AugComments TBR-Aug The Brock Report offered good discussion & summary of the grain market surprises that year.
dlr 06-30-2015 dlr 07-01-2015 June 2015 Acreage Report Discussion The 2015 report was a very good teaching example.
Follow your WSJ. General economic news is discussed, for example GDP. Usually, actual numbers are compared to expectations and the stock market usually reacts accordingly...
Find the CMEs Federal Funds futures quotes for 2021-09-09 & determine how far up interest rates are going to go.
Find the CMEs Crude Oil futures quotes for 2021-09-09 & determine the long-run price of oil.
AREC 412 Lecture D Forward Pricing & Measuring Risk 9/13
Top Producer The tail of two tails. Old article with good ways to think about risk.
Go to the weather services website and find the hurricane track forecast maps. If theres no active hurricane then look in the archive. (If you find one with a sharpie line then youre in the wrong place.)
CBOT Corn Prices Go to the CME Group website and look up the corn prices out the next several years.
KCBOT Wheat Prices Do the same for hard red winter wheat.
CME Crude Oil Prices Do the same for crude oil. What is a good long-run oil price?
CME Live Cattle & Feeder Cattle Prices What does the market think cattle prices will do?
AREC 412 Lecture E Basis & Basis Risk 9/20
AREC 412 Lecture F Grain Basis & Yield Risk 9/25
AREC 412 Lecture G Livestock Basis & Hedging Summary 10/4
Hedging with Futures and Options Examples Spreadsheet 10/15 to be reposted
This spreadsheet does many of the hedge calculations for a decision maker and allows the user to examine but-what-if questions.
End of material for Exam 1.
AREC 412 Lecture H Fundamental Analysis: Motivation & Nonstorable Commodities - 10/15
USDA Cattle on Feed Report
USDA Livestock Slaughter Report
USDA ERS Livestock & Dairy Outlook
Cattle-Fax Trends & Cattle-Fax Update
AREC 412 Lecture I Fundamental Analysis: Storable Commodities - 10/27
USDA World Agricultural Supply and Demand Estimates (WASDE) Report
USDA Crop Production Report & USDA Crop Progress Report & Crop Progress from the summer
USDA ERS Feedgrain Outlook, USDA ERS Oil Crops Outlook, & USDA ERS Wheat Outlook
AREC 412 Lecture J Technical Analysis: Summary - 11/19
End of material for Exam 2.
AREC 412 Overheads O 12/
Example Options Calculations and Graphs Spreadsheet 12/
Hedging with Futures and Options Examples Spreadsheet reposted above
AREC 412 Overheads Z
Handout - Mark to the Market 8/27
Handout - Risk and Return Figures 9/13
Handout - Risk and Expectations Figures 9/15
Handout - Wheat Basis Tables 9/20
Handout - Wheat Transportation Costs 9/20
Handout - Wheat Storage Costs, Seasonal Price Improvement & Basis Table Figures 9/20
Handout - Cattle Basis Tables 10/4 do not print
Handout - Cattle Transportation Costs 10/4
Handout - Cattle Basis Figures & Calculations 10/4
Handout - Forecast Live Cattle Futures 10/15
Handout - Forecast Feeder Cattle Futures 10/15
Handout - Cattle & Beef Markets Information - 10/20
Handout - Grain Balance Sheet Tables & Figures 10/27
Handout - Technical Analysis Tools 11/5
Handout Charts Print PDF as whole pages and not multiple document pages per printed page.
Charts 2020-11 Bar Chart Examples Trends & Support & Resistance 11/1 -
Charts 2020-11 Bar Chart Examples - Topping & Bottoming / Consolidation 11/ Mark-Ups posted 11/
Charts 2020-11 Alternative Charts Examples - 11/17 reposted 11/??
Elliott Wave The links www.dolefin.com have changed so you will need to go in through the front door if you want to see of topics.
Handout - Market Wizards Sample 10/27
Market Wizards Assignment Schedule - Your assignment is due by the end of the week at the beginning of class.
FuturesMag 2011-03 William Eckhardt Interview
Purcell & Koontz Textbook (Left Click to Open Link.)
Other Reading Material
WSJ 2008-07-17 Declining Value of College Degree - The news here is not really all that bad and it has implications what you do this last year or two of and what you need to do after university.
Articles on Speculators
Price Discovery Examples
CME Group Hedging Self-Study Guides
CMEG Self-Study Guide to Hedging with Grain and Oilseed Futures and Options.pdf
CMEG Self-Study Guide to Hedging with Livestock Futures and Options.pdf
CMEG Introduction to Dairy Futures and Options.pdf
Reading Material on Hedging & Risk
Farm Use of Futures, Options, and Marketing Contracts USDA ERS Publication
Managing Risk in Farming: Concepts, Research, and Analysis USDA ERS Publication
KC Federal Reserve Bank Ag Meeting Papers
Agricultural Cycles and Implications for the Near Term Ani L. Katchova and Ana Claudia SantAnna
The Normal Normal: Supply and Demand Drivers over the Next 10 Years Seth Meyer and Joe Glauber
Long-Run Uncertainties for U.S. Agriculture Rosamond L. Naylor
Transitioning to the Long Term Michael Gunderson
Reading Material on Problems with Basis Convergence
Non-Convergence in Domestic Commodity Futures Markets USDA ERS Publication
Poor Convergence Performance of CBOT Corn, Soybean and Wheat Futures Contracts University of Illinois Publication
The Causes and Effects of Wide Kansas Wheat Basis Bids Kansas State University Publication
Wheat Basis and Convergence Issues Kansas State University Presentation
Extra Reading Material
CSU DARE Undergraduate Learning Outcomes 8/23
Congressional Budget Office Report Outlook for the Budget and the Economy - https://www.cbo.gov/topics/budget/outlook-budget-and-economy 8/23
U.S. Federal Reserve System Economic Projections - https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210616.pdf 8/23
CFTC Complaint Against Kraft Foods Group & Mondelēz Global 8/23
CFTC Complaint Against PFG Best 8/23
CFTC Complaint Against MF Global 8/23
Gordon and Rouwenhorst - Yale University Paper - Facts and Fantasy's About Commodity Futures
Simulated Trading Material
AREC 412 List of Exam 1 Topics exam date 10/20 - There will be five or six multiple-part questions. One production hedge, one storage hedge, and three or four concept questions. The concept questions are short answer requiring definitions, lists, and discussion. Problem Sets are for figuring out the details of the decisions made and assessed. Exams will ask for some of this but will be brief and focused. The things that have not shown up on Problem Sets or Quizzes are the bigger-picture concepts at issue.
AREC 412 List of Exam 2 Questions exam date approximately 11/? - There will be five or six questions. Two fundamental analysis questions. Two or three technical analysis questions one or two using real-world charts and the balance will be a discussion/techniques/principles question. Finally, there will be one other discussion/context question.
AREC 412 List of Final Exam Questions (time & date posted on university final exam calendar & in syllabus) Two Hedge questions with one a Storage Hedge, one or two Fundamental Analysis questions with one being elasticities, two Technical Analysis questions with one or two involving charts, and several discussion-of-concept questions.
AREC 412 Quiz 1 - Customer Account 9/1 - due 9/8
AREC 412 Quiz 2 - Marking to Market 9/3 - due 9/10
Purcell & Koontz pages 5-8
PDF of the prices
AREC 412 Quiz 3 - Basic Hedge 10/1 & posted to Canvas due 10/4 for online students
AREC 412 Quiz 4 - Storage Hedge 10/8 & posted to Canvas - due 10/11 for online students
AREC 412 Quiz 5 Market Information 10/22 due 10/29
AREC 412 Quiz 6 - Charting
AREC 412 Problem Set 1 9/22 - due 9/29 (Start Parts F-K immediately and then complete Parts A-E when we cover that material this week in class.)
Problem Set 1 Data - Right Click and Save As...
Problem Set 1 Key to be posted to Canvas
AREC 412 Problem Set 2 10/1 - due 10/8
Problem Set 2 Key to be posted to Canvas
AREC 412 Problem Set 3 10/20 - due 10/27
Problem Set 3 Key to be posted to Canvas
AREC 412 Problem Set 4 11/3 due 11/15
Problem Set 4 Key to be posted to Canvas
AREC 412 Problem Set 5
Careers and Opportunities...
How to Get Rich Statement, not a question...
Savings and Investments Overheads
Savings and Investments Figures
WSJ Spreadsheet of Mutual Funds - somewhat edited