Koontz Class Material

AREC 412 - Agricultural Commodities Marketing - Material


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...

Communication Protocol

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 don’t 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 I’ll 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 – virtual 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

Overhead Materials

AREC 412 Lecture A – Introduction - 8/23 –  (If I update material then I’ll 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 year’s 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 CME’s Federal Funds futures quotes for 2021-09-09 & determine how far up interest rates are going to go.
    Find the CME’s 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 service’s website and find the hurricane track forecast maps.  If there’s no active hurricane then look in the “archive.”  (If you find one with a sharpie line then you’re 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 prior week
    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/
    Options Script
    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 - 10/22

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 2021-11 Bar Chart Examples – Trends & Support & Resistance – 11/3 -
   Charts 2021-11 Bar Chart Examples - Topping & Bottoming / Consolidation – 11/ – Mark-Ups posted 11/
   Charts 2021-11 Alternative Charts Examples - 11/17 – reposted 11/??
   Charts 2021-11 S&P 500 Charts Examples - 11/3 – 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 – 10/29

    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

Textbook Chapters

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.

Hedging Articles

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 Sant’Anna

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

Exam Information

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 12/1 - 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 – none

Problem Sets

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 – 10/22 - due 10/29
    Problem Set 3 Key – to be posted to Canvas

AREC 412 Problem Set 4 – 11/5 – due 11/18
    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