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It’s called ‘commodity challenge’

By Staff | Nov 25, 2011

Working through an exercise on Nov. 17 in preparing to play the Iowa Commodity Challenge are, from left, Jan Jome, of Ogden, Jean King and Marshall King, both of Boone. They were among 30 Iowans attending the kickoff meeting in Ogden.

By LARRY KERSHNER/Farm News news editor

OGDEN – It starts with a willingness to overcome one’s trepidation of working the commodity market and a curiosity in how market tools – put options, call options, cash sales, forward contracts and hedges – work. Add a computer and a workbook.

Then throw in a fictious 50,000 bushels of corn and 20,000 bushels of soybeans that must be marketed within the following 15 weeks, or no later than Leap Day 2012, and you have the Iowa Commodity Challenge.

“This is the first year for this game,”?said Steve Johnson, co-author of the challenge and one of two presenters at a kick-off meeting on Nov. 17 in Ogden.

Johnson, an Iowa State University farm management specialist, told 30 participants that they are one of four locations statewide for the challenge. The others are in Nevada, Lynnville, and Conrad.

Those meeting in Boone County will market their grain stocks through West Central Cooperative in Boone.

Their grain will be assessed six cents per bushel per month for storage. Another $50 will charged for purchasing each hedge or option.

“It gives players a chance to look at commodity markets and how they work over the course of several months,” Johnson said.

“This game is being set up in combination with the University of Minnesota. It reflects what is going on in the real world markets so we are able to try out some strategies in a setting where we can explore how our tools work.”

The online game ends Feb. 29, when participants must have sold their stored grain and settled any of their futures or ag options traded positions.

This course is being taught to undergraduate classes at ISU this year, Johnson said. He and two others who created the game – Chad Hart, an ISU grain markets specialist, and Ed Kordick, commodity services manager for the Iowa Farm Bureau Federation – expect the game’s use will expand to more players over the next few years.

“I’m excited about this,” said Chris Roberts, of Rippey. “I had a fear of using options, but now I can experiment without affecting my wallet.”

Roberts, who described himself as a third-generation share cropper, with the same third-generation land owners, said, “I want to give myself the strategies for using options.

“I know just enough to know I need to know more,”?Roberts said.

As of Nov. 18, a total of 108 players have enrolled, Johnson said.

Contact Larry Kershner at (515) 573-2141, Ext. 453 or kersh@farm-news.com.

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