Department of Agricultural and Consumer Economics

Office for Futures and Options Research (OFOR)

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Workshop Date Description Instructors
Intermediate to Advanced Agricultural Hedging

cancelled for
December 13-14, 2010
This program begins in the middle. After a quick review of hedging, basis and spreads, the instructor dives into hedge scenarios, the practice and benefits of rolling hedges, calculating cost of carry and covering carry charges in futures. Delivery is explained with examples of calculating futures markets delivery to the cash market. A sketchy review of options is provided before moving into practical but more advanced options strategies. The program is wrapped up with a trading game that assigns groups with the task of purchasing decisions for a feed manufacturing facility based on market information that is updated monthly. It is highly recommended that the participant have a solid understanding of futures, spreads and options. Fundamentals of the current world market drivers and situation wraps up the session. Ag consultant and speaker Sue Goll and OFOR associate Eugene Kunda

Day 1

9:00 Hedge, Basis & Spreads Review—basis drivers, trading basis, hedge strategies w/basis, various types of spreads

10:15 Break

10:30 Hedge & Spread Strategies—hedge examples incorporating fundamental market drivers, rolling hedges, using spreads to cover cost of carry, etc.

12:00 Lunch

1:00 Hedge & Spread Strategies (con’t.)

2:00 Calculating delivery values & what that means to the hedger

2:45 Break

3:00 Options & strategies—review, option trading, spreading options, rolling option positions, delta neutral, managing option positions, etc.

4:30 Adjourn

Day 2 - Morning

9:00 Options strategies (con’t)

10:30 Break

10:45 Breakout session—small group breakout that incorporates cash market position, physical plant objectives, fundamental market analysis, basis analysis & hedge decision making

12:00 Lunch

Day 2 - Afternoon

The afternoon session provides a thorough understanding of classical barcharting price pattern analysis. CBOT agricultural futures contracts will be used as the basis of the discussion. The session is designed specifically to impart the skills of constructing and interpreting charts. Participants will learn how to read buy and sell signals from the various price formations on the charts. With this knowledge, traders will be able to determine risk/reward parameters and develop strategies to make market decisions in a disciplined and objective manner.

Topics include:
    Ÿ Rationale for technical analysis
    Ÿ Interpretation of volume
    Ÿ Open Interest analysis
    Ÿ General rule for a healthy price trend on a futures charts
    Ÿ Seasonality
    Ÿ Trendline construction
    Ÿ Locating support and resistance
    Ÿ Reversal patterns
    Ÿ Continuation patterns
    Ÿ Gap theory
    Ÿ Minor trend change indicators
    Ÿ Mathematical models