The concept of establishing a futures position that was equal but opposite to a position in the cash commodity, first practiced by buyers and sellers of grain, became known as hedging. The FASB is now expected to issue new hedge accounting rules sometime later this year.Buyers and sellers of a huge variety of commodities, including those used as raw materials, face the common risk that the value (price) of those commodities may move in adverse directions that threaten them with a loss. Historically, buyers and sellers of grain have usually endured such risks to a greater degree because those prices have always been subject to very rapid changes. The trading of grain futures contracts developed at the Chicago Board of Trade (CBOT) in the lat...
What You Need to Know Today: Russia rejected calls for a ceasefire in the Black Sea, including a proposal to halt attacks on civilian shipping that could help restore grain flows from Ukrainian ports. Tyson Foods announced plans to permanently close its Joslin, Illinois, beef processing facili...
What You Need to Know Today: Wholesale inflation was flat in July, with the Producer Price Index (PPI) unchanged versus expectations for a 0.2 percent increase. Core PPI rose 0.2 percent, also below expectations. The softer inflation data has reduced the odds of a September interest rate incre...
From WPI Consulting
Communicating importance of value-added products
Facing increasing pressure to quantify the value of export promotion efforts to investors, a U.S. industry organization retained WPI to develop a quantitative model that better communicated the importance of exports. The resulting model concluded that value-added meat exports contributed $0.45 cents per bushel to the price of corn, increasing support for that sector’s financial support of WPI’s client. In addition to serving the red meat industry with this type of analysis, WPI has generated similar deliverables for the U.S. soybean and poultry/egg industries.