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.