Have a beef with the fertilizer industry? Love em' or hate em', we've got some information for you. We're going over industry leaders, product efficiency, usage, price trends, and charts! If you want a bunch of fertilizer fun facts for tonight's dinner table conversation, read on. And just in case you were wondering what this week's article picture is, the orange part of the rock is potash.
If you answered yes to the headline, then our next question should be simple. What is your farm's biggest profit sensitivity under your control? In other words, from year to year, what input or variable makes the biggest impact on how much money you make? If you answered average marketing price, congratulations. But, like most farmers today, you likely spend most of your time managing all the other inputs. Here's our perspective on costs vs. profits.
Everyone knows the term “big-agro” and who it represents. You’ve got Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus. All together making up your ABCD’s, a term coined by Cereal Secrets. They’re the ones who control the agricultural industry, but to what degree is kept somewhat concealed. I’m not talking about their likely close ties with fertilizer, seed, and food supply chain companies either. I’m talking about the financialization of the industry.
Using the context of a USDA Supply and Demand report for the grain market, I’ll be exploring the pros and cons of HFT for the everyday farmer/investor. If you’ve found yourself pondering the following questions, then this article is for you:
1. How do those machines interpret and react to the report results so fast?
2. Why does the market react so strongly to news that doesn’t seem to illicit such a response?
3. Overall, does HFT make life more difficult for farmers?
In 2007, Mark Davis was told by his bookkeeper that his grain marketing performance far exceeded the average and asked how he produced such results. The answer was constant expense documentation, technical pricing strategies, and following a consistent plan. Realizing that most farmers lack a plan to market cash grain, he developed Crop-Side Marketing in 2009 with his son Clint. The cornerstone of the business was and still is "Treat farming as a business, not just a lifestyle". Our mission is to instill this mindset in farmers, with the goal of farming more profitably.
"You need to treat farming as a business, not a lifestyle." This is our founder's quote of choice when speaking with farmers. Our business, Crop-Side grain marketing, is based on tested ideas that are easy to follow and take the emotions and guess work out of it. The following are the five pillars we base our strategy on, and believe you should too.
Many farmers believe beating the average price in corn or beans is easy, but grain marketing takes time and effort. Without having some technical knowledge about price, you may be throwing darts with your marketing plan. If you take a look at the charts below, you'll see that prices can trade far away from the contract average (red line). Now compare that line to the circles, representing Crop-Side sales. Today's article is about how our averages exceed contract averages by 36 cents in corn and 72 cents in beans over the past 6 years.
How do you know weather isn't going to destroy your crop? You don't, so you buy crop insurance. By the same token, how do you know that grain prices won't destroy your farm profits? You don't, but most farmers don't take the proper steps to manage this risk. Today, we're talking about options and how they can work for you.
Liquidity – The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price; Characterized by a high level of trading activity.
Liquidity is the most pivotal element of HFT (High frequency trading) vocabulary. Without it, most profit opportunities in high frequency would be gone. The name of the game is getting in and out quickly while minimizing risk and collecting as much edge (profit) as possible. In this article, we’ll go over several HFT strategies that revolve around this idea, and the biggest users of such strategies.
How fast is the speed of light? How many feet between Chicago and New York? These are need to know questions for trading infrastructure specialists that get information to high frequency traders. One such infrastructure specialist, Spread, estimates that every extra foot of fiber-optic cable adds about 1.5 nanoseconds of delay and each mile equates to an extra 8 microseconds. Just as a reminder, there are 1,000 milliseconds in a second, 1,000 microseconds in a millisecond, and 1,000 nanoseconds in a microsecond. So, if you blink, you may miss thousands of trades.
Now that you’re tuned into the basics of how the old world staked its name in trading, we can delve into the not-so-distant past. In this part two article, we're showcasing the progression of exchanges in the U.S. followed by a small section on perspective of trading today. Let’s begin with the nostalgic 1850’s.
July 6th, 2015 marked the day the CME grain pit closures took effect and after 167 years of trading and there is much to look back on. Not only the colorful jackets, mysterious hand signals and bold personalities, but a time honored tradition of how price is determined. Now is not the time to have pity and mourn the ending of an era, aptly named by Reuters. Instead, this is the opportune moment to review where price discovery has been and learn a bit about the innovations involved.