Jarrett Stork, Illinois State University

This semester I spent two days shadowing at Advance Trading Inc. in Bloomington, IL. ATI assists grain sellers and buyers in managing their risk through hedges in the futures market. My first day at ATI this year fell on the day the monthly USDA report came out. In the brokerage world, this is an important report because trading prices can be heavily affected by its predictions, although the impact of the report is greater in some months compared to others. When the report came out I was sitting with Nathan Mangold and watched as prices fluctuated wildly. This was a great insight into how the markets can change on a whim and how important it is to react correctly as a commodity trader when these reports come out. My second day came this past week and I spent most of my time with Curt Strubhar, a broker who mainly serves commodity buyers such as elevators and ethanol plants. The first hour was spent listening in on calls to clients from various regions of the country to discuss recent market activity and potential trading strategies going forward. Most farmers are busy planting here in central Illinois so this is a good time for brokers to formulate strategies before the crops are above the ground. Over the next hour, I met with two brokers who specialize in helping farmers manage their risk when selling grain. Key decisions in a farmer’s risk management strategy include whether to sell or store grain at harvest and which option stances to take in the futures market. To finish up my day, I again met with Curt and joined him on a video call with a couple other ATI employees and new investment company in St. Louis. The main topic of discussion was the soybean meal and soybean oil markets and how prices are determined for the different regions of the market. These markets are largely impacted by a value called crush, which is the difference in value of soybeans and its byproducts. The ratio of contracts to maximum daily crush can lead to a discount or a premium on shipments of these two commodities if the ratio is outside of the established range. It was a privilege for me to sit in on this call because it is a unique service offered by ATI, as they were helping a firm that doesn’t specialize in agriculture to become more familiar with the industry so that they can become more involved in it.