Understand The Basics of “Basis”
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- Category: Main Site Content
- Published on Wednesday, 15 September 2021 22:09
- Written by Joe Schmidt
Understand The Basics of “Basis” - Basis analysis can be the foundation of pricing decisions.
Basis is simply the difference between local cash prices and the futures price at the CME. To start your analysis, collect basis for several vendors locations at least once a week. Over time, you’ll see clear marketing signals from the basis analysis.
Know the Cause
Basis is influenced by several factors. Those include:
How Grain Trading Works After the Farmer
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- Category: Main Site Content
- Published on Monday, 01 March 2021 16:03
- Written by Joe Schmidt
How Grain Trading Works After Farmers Sell And Deliver Their Grain
What Happens to Grain After It’s Delivered to Elevators?
Some farmers may be surprised how many times 1 bushel of grain changes hands before it’s consumed or processed in another country. As a farmer and grain trader, I’ve watched grain sold from our farm and delivered to an elevator be sold and shipped by rail 500 miles away to be used for some type of animal feed several months after we deliver it to my local elevator. That company however might have turned around and sold those bushels to another company before the train was loaded and this new buyer may take the grain to another destination possibly for export.
If that second company sells it to an export facility the new third buyer in the chain may either arrange vessel freight and export paperwork themselves or sell it yet to a fourth company to handle export transport logistics across the ocean.
Once the grain arrives in another country, it can be sold again to another company who off-loads it and puts it in storage. This foreign company might sell it directly to an end user or it could be sold several more times before reaching the final-end user.
While there are countless possible trade scenarios, most exported grain is transported by at least 3 modes of transportation (i.e., truck, train or barge and bulk ship or container vessels) and can be traded between 6 to 8 different companies before it reaches the final end user in another country.
Perfect the 5 “Hows” of Risk Management
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- Category: Risk Management
- Published on Wednesday, 07 February 2018 20:46
- Written by Joe Schmidt
Perfect the 5 “Hows” of Risk Management
Five changes can help you be a better risk manager.
Risk management is not about being right, accurate, or perfecting some algorithm. “Right” today could be “wrong” tomorrow, and these are not the metrics of risk management. The practice of risk management is more like the “practice” of being human: We are in the process of perfecting our response to unpredictable circumstances.
In the case of production risk management, this means unpredictable markets, politics, weather, disease, technologies, labor practices, and operational shifts. Here are some factors you should be “perfecting” when it comes to risk management.
Change Your Conversation—
- Come to risk management conversations prepared to make decisions TOGETHER; not to argue what data is correct or incorrect. Resist the temptation of seeing different recommendations or strategies as competing or conflicting; they should serve as feeder data used to co-create the best recommendation customized for your operation given your goals.
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Start taking control today...
We all know how hard it is to predict the future. With today's rollercoaster markets, this proves to be an even bigger challenge then ever before. Joseph F. Schmidt understands this and is here to help your business stay ahead of the curve. Let his 25+ years of experience in reading the markets help you take control of your business today.
Be better than you ever imagined. Be in control.
GREATEST RISK OF RISK MANAGEMENT
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- Category: Risk Management
- Published on Wednesday, 31 January 2018 06:53
- Written by Joe Schmidt
Do you practice risk management in a manner that empowers your advisors, employees, and bankers to participate in protecting your operation? This isn’t a question of “are you smart enough?” It’s a question of “how do you think and practice?” when you work with internal and external advisors.
We partner with producers and production teams characterized by vastly diverse age groups, financial capacity, professional experience, geographic location, and education. And we’ve come to an astonishing conclusion: rarely does a failure of technical understanding or intellect compromise risk management practices. Our clients are smart—mavericks, pioneers, entrepreneurs, innovators and brilliant people, and these people generally make us smarter. That’s a driving directive of our business: we are smarter together.
