Reduce Risk with Automated Grain Hedging from Barchart

The risks that come with being a grain merchandiser or originator are unavoidable, but automating the hedging process can help immensely. In order to minimize this risk, we set out to design a way to automatically facilitate grain marketing. cmdtyView Hedge is an automated hedging portal for grain merchandising that alleviates the risks associated with cash transactions between producers and merchandisers. 

What exactly are we offering? cmdtyView Hedge enables users to autohedge for grain. The purpose of Hedge Management is to link cash and futures orders so that any time there is price movement on the cash offer, the hedge order will be adjusted dynamically allowing the elevator to remain fully hedged. In addition to auto-adjusting hedge orders, cmdtyView Hedge also provides a tracking mechanism whereby the elevator can view their current futures and cash positions across different commodities, expirations, and delivery dates. 

What does it do? Barchart already connects producers and grain buyers by linking producer-facing apps to cmdtyView - the addition of cmdtyView Hedge unlocks more efficiency by allowing users to hedge and trade a bushel automatically. cmdtyView empowers users by creating automated hedge orders for open offers and then pushing grain contracts and hedge executions directly into an agribusiness’s ERP system when an offer matches. 

How do I place an order? Placing cash and futures hedge orders with cmdtyView is simple!  The merchandiser creates a new cash grain bid via the Bids window. In this example, a cash bid is created for “New Crop Corn 22’ for a delivery period from 10/01/2022 - 12/31/2022 using the December CBOT Corn futures. At the time of bid creation, the current CBOT ZCZ22 bid is 629.25. With a basis level set at -.10 cents below the futures bid, the cash bid is 619.25.

Once the bid is created and made producer-facing via the ‘Add’ button, the bid is ‘tradeable’ and the producer can then take action on the bid.  In the example below, the Bid window is linked to the Basis Trade window where the producer, or the merchandiser on behalf of the producer, can make an offer to sell cash grain to the elevator location. 

The Basis Trade window shows the current bid and allows the producer to sell directly to the bid or raise their offer by manually entering in a value or by using the up or down arrows to set their offer price. Below, the offer to sell cash grain has been raised to 630.25, 10 cents higher than the prevailing bid. 

Once the order is placed, the merchandiser's Orders window is updated with both the cash offer from the producer as well as the auto hedge in tow. Below, farmer ‘AK’ has placed an order to sell 5000 bushels of corn to the ‘Grants Pass’ location at a price of 630.25. Once the order is confirmed, the merchandiser will see both a working cash order and an offsetting futures order (hedge) placed simultaneously in their Orders panel. The futures hedge is placed .10 cents over the cash order by default.
 

What happens now? After you’re set-up with cmdtyView Hedge, the opportunities are endless! cmdtyView Hedge allows merchandisers to: 

• Dynamically adjust all open GTC orders when Basis changes
• Automatically accept offers and immediately create a pre-hedge GTC futures order
• Bundle offers from producers below 5000 bushels into Hedgeable ‘tail’ quantities
• Dynamically adjust GTC futures orders when a producer(s) changes their offer
• Allows merchandisers to unwind filled hedges when grain ownership changes
• Dynamically push filled orders for both cash and futures transactions to their ERP which allows them to create a Daily Position Report that summarizes all of the above cash and futures positions, assets and liabilities plus owned inventory, farmer-owned inventory, and more!

Implementing an automated hedging portal for grain merchandising will allow you to maximize your workflow while avoiding costly errors. Ready to get started? To learn more or to request a demo of cmdtyView Hedge, please click here or contact us at commodities@barchart.com.