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News From the world of Agribusiness
02.11.2012
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    • Farmer Co-op Council Testifies on Wall Street Reform Act

    Implementing legislation aimed a reforming Wall Street could have an impact on farmer cooperatives.

    ncfcAs the Commodities Futures Trading Corporation (CFTC) implements provisions of the Dodd-Frank Act involving over the counter (OTC) derivatives, the Commission must ensure that farmer co-ops can continue to effectively manage risk and offer hedging tools to their farmer-owners, a representative of the National Council of Farmer Cooperatives (NCFC) said during a hearing in Washington this week.

    The comments were made by Ed Gallagher, president of Dairy Risk Management Services, a division of Dairy Farmers of America, and vice president of risk management for Dairylea Cooperative, at a House Committee on Agriculture hearing looking at implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    “Due to market volatility in recent years, cooperatives are increasingly using OTC products to help them diversify their exposure by customizing their hedges,” Gallagher testified. “In addition, OTC derivatives offer cooperatives the ability to provide specialized products to farmers and ranchers to help them better manage their risk and returns. A co-op can aggregate its owner-members’ small volume hedges or forward contracts and offset that risk with a futures contract or by entering into another customized hedge via the swaps market.”

    For an example, Gallagher discussed the ways in which his co-op helps their dairy farmer members hedge against increases in feed prices. Without the co-op involvement, he emphasized, individual producers would be unable to mitigate this risk effectively.

    “Many producers are not able to use the futures markets to hedge input risk because of the larger volumes underlying the relevant futures contracts,” Gallagher said in his written testimony. “Furthermore, corn and soybean contracts do not trade on a monthly basis—while most of our members purchase feed on a monthly basis.”

    A wide variety of farmer co-ops, including those in the grain and livestock sectors, use OTC derivatives to offer similar products.

    Filed as: Cooperatives /Futures
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    Posted by Cindy • February 11, 2011 • 1:31 pm

    BASF Hosts Farm Futures Talk at Farm Progress

    AgWired coverage of the 2009 Farm Progress Show
    is sponsored by: BASF and New Holland

    BASF at Farm Progress Show Photo Album

    Arlen Suderman at BASF Tent Farm Progress 2009New dynamics are shaping the future for agriculture and farmers need to be watching the markets more closely than ever before to keep ahead of the game, according to market analyst Arlen Suderman with Farm Futures.

    “There’s a lot of money flow factors that drive the money, that tie what happens in grains to the bond market, the energy market, the value of the dollar,” Arlen said during a talk at the BASF tent during the 2009 Farm Progress Show. “That creates a lot of uncertainty, but there’s also reasons why it happens on a day to day basis.”

    Arlen talked about factors like crude oil, corn and soybean stocks, export demand and much more. “Part of the real key over the next six months is when do we get that first frost, that will be a major driver in the soybean market with demand being so strong and that will set the tone for corn and wheat as well,” Arlen said.

    Listen to or download a brief interview I did with Arlen right after his presentation:

    Podcast: Play in new window | Download

    Filed as: Audio /BASF /Corn /Farm Progress Show /Futures /Markets /New Holland /Soybean
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    Posted by Cindy • September 8, 2009 • 8:51 am

    MGEX to Close Trading Pits

    After a long history of futures and options open outcry trading, the Minneapolis Grain Exchange is closing its trading pits effective December 19, 2008. The decision to make the transition to exclusively electronic trading was unanimously approved by the MGEX Board of Directors and is pending MGEX ownership approval.

    MGEXAccording to a MGEX release, the decision comes after an exhaustive study done by MGEX Management at the request of the Board of Directors. “Over the past 12 months there has been a dramatic trend away from open outcry and towards electronic trading witnessed by all U.S. exchanges, including MGEX,” said MGEX CEO Mark Bagan. He agreed that the transition was “inevitable” during a press conference with reporters today.

    “Our customers who use the exchange for risk management purposes will still have the ability to still execute those trades,” Bagan said. “This was not a financial decision, as much as it was how do we grow our marketplace here in Minneapolis.”

    MGEX Management will work closely with all members of the trading floor community to ensure an effective transition for all affected parties. The Exchange will implement a fee waiver program for floor traders who trade for their own account. In addition, a liquidity provider program and market maker program are being introduced. These initiatives are designed to help facilitate the change in venues and build market participation.

    Listen to a press conference this afternoon with Mark Bagan, President & CEO, MGEX.
    mgex-10-24-08.mp3

    You can also download the audio with this link:
    Mark Bagan press conference (mp3)

    Podcast: Play in new window | Download

    Filed as: Financial /Futures /Wheat
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    Posted by Cindy • October 24, 2008 • 3:43 pm