Ethical Issue

      Genetically modified organisms (GMO's) are a big issue in the world today and some may not fully understand what they are. Many do know, however, that there is opposition to them and there are governmental regulations that must be followed when working with GMO's. GMO's are basically an organism whose genetic material has been altered by using genes from other sources. For more background on GMO's, here are two links that will help your understanding: Wikipediahttp://www.ornl.gov/sci/techresources/Human_Genome/elsi/gmfood.shtml, http://en.wikipedia.org/wiki/Genetically_modified_organism. The big issue with GMO's is that many people are not convinced it is totally safe to eat GMO's. Some argue that GMO's can have new allergens in the food and they may contribute to the spread of antibiotic resistance. The United States Department of Agriculture (USDA) puts many regulations on the making of GMO's that some consider safer than the traditional techniques of making food because of these regulations. There has been no evidence of the long term effects of GMO's but many people do not like them because it is a new technology and are not aware of the regulations GMO's have to go through to enter the food industry.

       For me personally, I think that GMO's can be a very good thing for humans, especially with the rising population. I have seen the test results of GMO's on humans and the effects of eating a GMO and a non-GMO. I feel as though I do not have to worry if I am eating a GMO. I believe that GMO's can increase the world food supply by producing crops with higher yields and are more resistant to biotic and abiotic diseases. More food supply and better quality means less starving people. There is another side of the issue, though. Many people are opposed to GMO's for a variety of reasons and I can understand their position. Many think they are harmful to animals by placing animal genes with plants. They believe GMO’s influence nature by mixing genes of different species. Another major issue is that some believe it goes against areas that should be left to God. I believe that farmers should grow non-GMO's and GMO's, which is being done now. People can choose what they buy in stores and people should have the right to know what they buy through labels GMO labels on products. What effect that will have on the food market, I do not know, but right now many food products are not labeled.

       I believe that as technology progresses, there are going to be more ethical issues that will occur. It is hard for a person to take a stand on an issue, especially with an issue they do not fully understand. In my mind, GMO's are safe to consume but many people are hesitant and are demanding non-GMO crops. The future implications of GMO's can be very beneficial to the world and really can improve the standard of living worldwide. People opposed can buy products that have non-GMO labels or they can buy organic foods. I believe that this issue will not come to an end anytime soon and foresee it causing significant change in the food industry.

References:
http://iml.jou.ufl.edu/projects/spring01/denlinger/public.html
http://en.wikipedia.org/wiki/Genetically_modified_organism
http://www.bio.davidson.edu/people/kabernd/seminar/2004/GMevents/NH/NH.html

News Analysis

       One major storyline facing agriculture is the growing world population and the ability to provide everyone with enough food. The world population is just over 6.9 billion right now and by 2045 there will be around 9 billion according to the U.S. Census Bureau. That is a major concern for the food industry because the increase in number of people does not coincide with an increase in the number of acres to grow food products. The agriculture industry needs to increase production with the same number of acres. Right now though the industry is having troubles meeting the global demand for certain commodities and that is affecting the field of grain merchandising and price analysis.

       Currently, grain prices have never maintained such high prices for this length of time. This is because the demand for the commodities is not being met by the supply. For corn, the United States Department of Agriculture is projecting a 148 bushel/acre yield for the U.S. compared to last year’s yield of 164.7 bushel/acre. The projected ending stocks of corn are at 672 million bushels compared to last years ending stocks of 1,708 million bushels. Wheat is experiencing the same problem as corn. The projected ending stocks for September are 761 million bushels compared to last year’s 976 million bushels. The soybean yield estimate is smaller than last year’s yield but the ending stocks for this year are larger compared to last year’s due to an increase acreage planted. These numbers are down because of the high amounts of water experienced early when farmers were planting. Many were not able to get a lot of their acres planted and this has caused the grain prices to remain high. The main concern for a grain merchandiser or a price and risk analyst is the volatility of the market that can cause them to lose money if they were to expose themselves to the risk.

       The global demand for agriculture commodities and lack of supply in the past few years is causing grain prices to remain high. The grain markets are very volatile right now meaning there can be large changes in prices in a short amount of time. For example, there can be 40-50 cent prices changes in a matter of minutes compared to the past, where a significant price change was 10 cents in an entire day. A grain merchandiser needs to be aware of what the market is doing and where it is heading to avoid losing substantial amounts of money. For example, a grain merchandiser buys 100,000 bushels of soybeans at 13.50/bushel cash price and does not hedge the grain that was just bought. Now the grain merchandiser runs the risk of the market going down. Let’s say now a week later the market has gone down 75 cents and the merchandiser sells the 100,000 bushels of grain at 12.75/bushel. They receive a lot of money for selling that amount but they paid $75,000 more than what they sold it at. The grain merchandiser has lost $75,000 because they did not hedge the grain when it was bought and the price dropped. This volatility in grain prices, from the lack of supply and the large demand from the growing world population, has caused many people that work in the agriculture industry to lose almost everything they have. Looking to the future population and agriculture estimates, this will only grow into a larger problem facing the world.

 References:
http://www.census.gov/
http://www.usda.gov/wps/portal/usda/usdahome?navid=AGENCY_REPORTS

Review

       This past summer I work as a grain merchandising intern for Archer Daniels Midland Benson Quinn. They are an agriculture processing facility based out of Minneapolis owned by Archer Daniels Midland based out of Illinois. I was located at one of their shuttle elevators in Argyle, MN. The shuttle loader buys, sells, and transports large amounts of grain in 110 railcars called a shuttle, hence the label of a shuttle loader. One of my duties as the grain merchandising intern included buying grain from farmers and then hedging grain. Hedging grain is either buying or selling a futures contract based on if you bought or sold cash grain to avoid the risk of prices on the grain markets increasing or decreasing. For example, a person buys corn for $7.50 but then the price of the corn drops down to $7.00 causing them to lose $.50 a bushel for the for every bushel bought. To avoid that problem, a person can sell a futures contract at $7.50 and then buy a futures contract when they sell the grain at a later date. This process is known as hedging. To gain a better understanding of hedging, follow this link http://www.cmegroup.com/education/interactive/webinars-archived/introduction-to-hedging-grains-and-oilseeds.html. In the years past, a person would have to call a brokerage firm or a grain exchange to have hedge grain. Now a person can hedge grain from their computer without having to call anyone or even get off the phone with the farmer. The system that is used by all ADM Benson Quinn grain elevators and processors is Oak Desktop Trading Systems.

       Oak Desktop Trading System is a complicated tool at first, especially if a person does not know the proper abbreviations and the correct steps to hedge the grain. Anyone who is licensed to trade commodities by buying and selling futures can use Oak Desktop Trading Systems as long as they pay for the software. The system provides live quotes of any commodity that is actively traded on a market, so it is vital that the person is trading the correct commodity and the futures month. This new tool makes hedging grain much easier and more time efficient. It takes a person who is using Oak Desktop about fifteen seconds to hedge grain. This is much more efficient when compared to the time it takes to call brokers and list the details of the hedge. Although it is a very efficient system to use, there are some drawbacks to the system.

       The drawbacks are minimal compared to the benefits but there are drawbacks no less. One drawback is that it is very easy to make a mistake when entering in the hedge because there are letters that represent futures months and prices that people can easily mistype on. Another drawback is that a person has to make sure that there hedge is on the correct commodity and futures month. The price ladder, which is a list of prices for a commodity, has to be on the correct commodity and futures month as well. The price ladder lists the prices of commodities in cents and it also shows the number of contracts selling and buying at the different prices. Another drawback is the price ladder shows live quotes of prices, which can entice people to wait for higher prices. To view the price ladder follow this link http://www.oaktrading.com/Products/OakDesktop/View.aspx?View=1#.  On numerous occasions, people wait for a higher price but the market never reaches it and they lose money they could have had if they did not wait for the higher price. The drawbacks are minimal and should not deter a person who buys and sells grain or any other commodity from using Oak Desktop. There are drawbacks to Oak Desktop but the benefits a person can have using this technology is definitely worth some of the flaws. Oak Desktop is another piece of technology that continues to advance the agriculture industry.

Explanation of Field

      My name is Bryant Sanderson and I am majoring in Agricultural Economics where I plan to be a grain merchandiser or a price and risk analyst for a major grain company. In this field the major point of emphasis is the commodities that are being bought and sold on the grain markets. The grain markets trade future prices of a commodity, such as corn, months and years in advance so people who buy and sell the commodities know what they are worth. This helps the buyers and sellers avoid the risk of price difference.

The grain futures markets are influenced by many factors such as the environment, time of year, hedge funds, United States Department of Agriculture reports, demand for commodities, and many more. There are many commodities that are traded on futures exchanges but the main four in this area of the world are soybeans, corn, and spring and winter wheat. There are three main exchanges in the U.S. that trade these commodities. One is the Chicago Board of Trade which trades corn, soybeans, and other grains. The other two are the Kansas City Board of Trade, which trades winter wheat, and the Minneapolis Grain Exchange, which trades spring wheat. Farmers sell these commodities to grain merchandisers at grain elevators and the elevators will ship them off to processors. The processors will then sell to grocery stores and other businesses as a final product for consumers.
           As a grain merchandiser, I would be working for a grain elevator or a processor buying and selling grain. If I were to work at an elevator, I would buy grain from farmers and other elevators and then sell to processors. If I were to work at a processor, I would buy grain from farmers and grain elevators and I may or may not sell the product depending on the company’s capabilities. A grain merchandiser's main focus is on the grain markets because they can take advantage of price decreases or increases. In order to make money a grain merchandiser includes a basis in their buying price to cover costs such as transportation, storage, interest, and profit margin. The basis is an important aspect in buying and selling grain that can make trader’s money or lose them money.

There is a strong set of beliefs in the people who work in this industry. All who participate in buying and selling grain feel that they are providing people with food, energy, and strong support for the nation’s economy. Needless to say it is a proud group of people, but they feel that way because they work hard and love what they do. Aside from the natural attitude of the industry, there is terminology that is different and complex from any other industry. Grain merchandisers need to understand the terminology, the grain markets, and understand their financial status in order to make sound decisions.

 As a price and risk analyst, I would be forecasting the grain markets for a company that they will use to base their buying and selling decisions from. A price and risk analyst would also address the susceptibility to risk for the firm they are working for by analyzing inventory and grain prices. To be a price or risk analyst, a person will need to at least get a master’s degree to acquire the necessary skill set. A price and risk analyst is most interested in the firm they are working for and how the firm can make the highest profit based on the futures markets. The purpose of a price or risk analyst is to assist the firm in avoiding losing large amounts of money based on the fluctuations of the futures markets and the grain they buy and sell.