Risk Management

SwineCast 0570

• The National Pork Board's Pork Management Conference is a top thinker's - bottom line kind of get together.  We promote the program here at SwineCast as a must-attend for managers.  Today, David Ward, Senior Risk Manager for Commodity and Ingredient Hedging (CIH) provides attendees some tips for those recognizing the value of risk management and why it needs to be part of your strategic plan.  These selected comments were just part of the full presentation those in attendance enjoyed.  Click here for most Pork Management Conference powerpoint slide sets.

SwineCast 0505

• AgStar Financial's Mark Greenwood discusses risk management issues and concepts with attendees of the Iowa Pork Congress.  Mark's full presentation video is available here.

     The pig production business has always had its ups and downs but developments over the last few years have resulted in the structuralization of increased levels of price and financial risk.  By structuralization, I mean that these factors are now regular, recurring added risks that are no longer random, isolated events which no risk management process can adequately predict or mitigate effectively.  The factors include the predicted and now realized reduction in the average level of the stocks-to-use ratios for corn and soybeans placing feed prices in a continuing, annual, heightened state of price risk volatility.  Bob Wisner, retired crop extension professor from Iowa State University told World Pork Expo attendees that we will end up the soybean year with as little as 2.2 weeks of the supply remaining.  The cold, rainy corn belt conditions which delayed the corn planting period in the U.S.

"When you are out of cash, you are out of business", is a truism which should be on the top of everyone's mind these days.  With the bankruptcy filing of Pilgrim's Pride and VeraSun we are witnessing the turmoil and equity destruction which has been brought on by the tremendous volatility in commodity prices experienced over the last year.  This volatility is directly related to (but not completely the result of) government policy interventions, especially ethanol policy.

     Now that the major investment banks of the United States are essentially a curious part of our history, the availability of capital, especially for risky projects is going to be hard to find for an extended period. 

SwineCast 0301 Show Notes:

• Economist Steve Meyers discusses Pork Management presentation and the next year's industry outlook
• SwineCast blogger Mark Greenwood steps up to look at management steps to make sure you and your lender continue the big dance
• Food inflation will be hitting the U.S. consumer in a big way... and they'll think you're responsible. Get traction on answering the questions you'll be asked.