• Ontario Grain Market Commentary
• Marketing seminar
• Research Committee tour
• Eastern Ontario Grower Event
• Good in Every Grain at the CNE
• Ontario Wheat Harvest Survey

Harvest 2017 prices as of noon on August 18, 2017 are as follows:
SWW @ $178.14/MT ($4.85/bu),  HRW @ $185.06/MT ($5.04/bu)
HRS @ $249.67/MT ($6.80/bu),   SRW @ $182.76/MT ($4.97/bu)

Marketing Education
Technical Analysis: Margin Explained
When an investor opens an account with a brokerage firm, there is a minimum account deposit made.  This amount varies from brokerage to brokerage house.  These funds will eventually act as a pool or good will deposit for transactions in that account. For this example, we will open an account with a $5,000 deposit.

Margin is defined as a performance bond or good will security. In the case of futures trading, the margin required for each contract entered into represents a fraction of the value of the futures contract (usually three to 12 per cent).  Using corn as an example, the value of a 5,000 bushel contract of corn trading in Chicago at $4 per bushel is $20,000 (5,000 x $4).

The margin requirement for a trader to enter into one contract of corn is about $1,500 per contract which represents 7.5% of the contract value. This margin deposit is used to secure day to day price fluctuations on any losses and is referred to as marked to market, meaning that any losses or profits from a given day will be added to or subtracted from the clients account available balance at the end of each day. When you liquidate your corn position, you will receive the initial deposit ($1,500) plus or minus profits or losses on that trade.

Initial margin is the minimum amount required to enter into a new futures contract ($1,500), but the maintenance margin is the lowest amount an account can reach before needing to be replenished. In this case any losses that would reduce the initial margin of $1,500 to $800 would trigger a margin call to replenish the margin funds back to the initial margin of $1,500. However, since our account was opened with $5,000 then the excess margin would come from the $3,500 available in your account. ($5,000-initial margin of $1,500 = $3,500). Replenishing the initial margin back to $1,500 would require subtracting $700 from your excess funds of $3,500.

Trade Example
Let's say that you purchased a December corn contract with an initial margin of $1,500.  That $1,500 would be segregated from your account funds ($5,000) leaving $3,500 excess in your trading account.  As the days pass, the price of corn drops 12 cents per bushel or $600.  This leaves your initial margin balance at $900.  The following day the corn drops another three cents per bushel or $150.  This closing price leaves the balance in your initial margin account at $750.  Since the maintenance margin is $800 you now receive a “margin call” of $750 which will replenish your margin to the original $1,500.  In our case this margin would be taken from our available balance of $3,500 excess money in your trading account. Your excess margin would now be calculated as follows.

Original deposit $5,000
Initial margin -$1,500 (account balance $3,500)
Margin call    -$800       account balance $2,700)

Feedback is important.  If you find this education series beneficial, please contact Marty Hibbs, Grain Merchandiser at mhibbs@gfo.ca.

DISCLAIMER: This information has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made by the author, by Grain Farmers of Ontario, or by any other person as to its accuracy, completeness or correctness and Grain Farmers of Ontario accepts no liability whatsoever for any loss arising from any use of same. •

Grain Farmers of Ontario’s grain merchandiser, Marty Hibbs, conducted a marketing seminar in District 4 (Middlesex) this week. The seminar was attended by about 50 grain producers interested in learning more about the futures markets. The session was designed as an introductory session to commodity marketing for young couples.
 
Thank you to Grant Dietrich, District 4 (Middlesex) delegate, for hosting the seminar at his farm shop. •

Sevita International- PROSeeds is inviting all growers to attend their 2017 Eastern Ontario Grower Event.  The event includes lunch and the opportunity to learn about new corn hybrids, traited and conventional soybean varieties, Legend Seeds in Eastern Canada, new non-GMO export opportunities, and more.
 
Location: Sevita-PROSeeds demo plot on Highway 43 (just West of Weagant Farm Supplies Ltd.)
Date: Wednesday, August 30, 2017
Time: Registration begins at 9 a.m.
 
RSVP to Kelley at 613-989-3000 or David at 613-880-2705 by August 24, 2017 to reserve your spot. •

Grain Farmers of Ontario is at the Canadian National Exhibition (CNE) celebrating the Good in Every Grain with fair-goers for the next two weeks. The Grain Discovery Zone corn box exhibit trailer is on site in “The Farm” building – a great educational centre where urban consumers can learn about agriculture. Be sure to stop by and take a selfie with our photo booth that you can share on social media. Twitter @GoodinGrain •

Grain Farmers of Ontario’s annual Wheat Harvest Survey is underway. Preliminary information on the 2017 crop is available at http://gfo.ca/Production/Ontario-Wheat-Quality. Information will be updated here as more results become available. You can also learn more about the survey in this week’s episode of Inside Grain Farmers of Ontario. •