Given what’s happened in the markets in the past couple of months, it’s a good time to revisit risk: how to think about it, how to manage it and its practical impact on marketing and hedging. As the coronavirus was unleashing its effects on the markets, I was also reading an interesting book called An
Volatile times need a market strategy
Think of these tools as an insurance policy where you pay a fee to avoid risks
The stocks-to-use ratio is an important but not perfect market metric
There are a lot of ways to analyze the fundamental situation of grain markets. You can look at production figures, export numbers, inventories, farmer deliveries as well as elevators supplies. Recently, I’ve heard a lot about stocks-to-use ratio as a fundamental gauge of supply and demand. So naturally, I ask myself: “What kind of historical
Markets watch the weather
Rain makes grain, and it’s one of the most volatile variables for Prairie farms
Price and yield are the two biggest determinants of farm revenue. Using farming software to run simulations and what-if scenarios shows that even a modest change in commodity prices or crop yields can have a big impact on gross margins and the bottom line. This makes sense, given revenues are top line 100-cent dollars. While
The view from GrainWorld
Most presenters said there are a lot of balls in the air right now, and nobody knows where they will fall
It is definitely one conference not to be missed. Numerous speakers covered various topics although this year it seemed that most things that made me go “hmmm” were in the areas of trade dynamics, political/social factors, marketing and, of course, technology. Political and social factors dominated many of the sessions with suggestions that there will
Currency volatility important to remember
We’re currently at the low end of the historic range for the loonie’s value against the greenback
Canada exports almost a third of its gross domestic products of goods and services. And when it comes to agriculture, those percentages are even higher. Based on statistics from the Canadian Agri-Food Trade Alliance, we export 50 per cent of our beef/cattle, 65 per cent of our malt barley, 70 per cent of our soybeans,
Derwin: Analyzing interest rate trends
Interest rates can do some surprising things for longer than expected
I put a great deal of effort in to analyzing long-term historical trends to better understand the cyclical nature of human behaviour and its impact on financial market prices. Interest rates are no exception. In fact, interest rates are key to the pricing structure of almost every other asset from stocks, gold and currencies to
Using ratios to calculate your farm’s performance
Use this simple but powerful tool to see how you’re really doing on your farm
Last month, we looked at how a review and assessment of your marketing can help make your production sales more balanced, easier to manage and ultimately more profitable. This month, we’ll look at how these marketing practices are part of a bigger picture called gross margin efficiencies. As we all know, commodity sales are your
Watch agricultural commodity markets for seasonal patterns
Taking advantage of these trends to your benefit is both an art and science
Seasonality in farm commodity prices is a commonly followed market indicator and it makes some sense. Given crops are planted in the spring, subject to weather throughout the growing season and then harvested in the fall, they follow a natural pattern throughout the calendar year. But the more important question is: can you profit from
Derwin: Dollar direction signals hard to decipher
Every week the Commodity Futures Trading Commission (CFTC) releases its Commitments of Traders (COT) report. But just how committed are the traders shown in those trading activity reports? When you look at what traders can also do in the cash, over-the-counter and physical markets associated with those futures contracts, it’s difficult to say for sure. This
Thinking in bets
A poker champ turned strategy consultant can help you understand markets a bit better
Last month I explored a book called History’s Worst Predictions And The People Who Made Them, and the simple conclusion was that predicting the future is difficult. I said that: “While there is nothing wrong with financial forecasts or market outlooks, be careful of right or wrong statements and all or nothing thinking. Avoid words
Cyber-Savvy Farmer
