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Futures Trading in Agricultural Commodities
FRE 517
Instructor: Carl Bayard
Office: TBA
Office Hours: TBA
Class Schedule: Wed 2:30pm - 5:30pm
Classroom: MCML 258
Important Course Pages
Lecture Notes
Course Discussion

Course Goals

  • To gain practical knowledge on the use of commodity futures from past experiences of a Canadian international commodity trader.
  • Participate in a CME competition (team size 3-5 maximum 4 teams) where weeks 1-3 will be practice real trading to start week 4.
  • Use futures contracts as merchants, traders and portfolio managers in the areas of:
  1. Grain companies that merchandise crops.
  2. Oilseed crushers that trade edible/industrial oils as well as livestock feed.
  3. Corn distillers that trade ethanol and livestock feed.
  4. Grain millers that trade flour and livestock feed.
  5. Options trader working for a bank's investment division.
  • Understand the importance of foreign exchange on US$ futures (proportional hedging).

CME Group's Trading Challenge

CME Group's Trading Challenge is a complimentary four-week electronic trading competition where teams of undergraduate and graduate students can trade a variety of CME Group products from multiple asset classes in a simulated trading environment on a real-time professional trading platform provided by CQG. In the first class we shall go review the challenge format, establish the teams, and prepare for the practice rounds. For more information please go to


Activity Date Percent of Grade
Assignments Week 3 and Week 4 30%
Class Participation Throughout the 7 classes 30%
Final Report Due 2 weeks after the end of the competition 30%
Peer Evaluation Due 2 weeks after the end of the competition 10%
Total: 100%

Problem Sets

At the end of the first class students will split into four groups. In class we shall review industry applications of how they utilize futures strategies. Each group will work on an assignment based on the industry of the week. In the third class, groups will submit their assignments and also give a short presentation (5-10 min) on their assignment to the class. The expectations will be to set out the strategies and futures trades focusing on maximizing trading opportunities for that industry while using real time prices via; gross margins per grain tonnes handled and shipped, oilseed volume crushed at optimum margins (calculating crush margins for both cash and board), ethanol and feed produced (hedging corn purchases versus ethanol and feed sales), flour sales at maximum yields (hedging wheat purchases versus flour and bran sales). We will also review the role of an options trader at an investment bank. Each student will be required to manage one futures account relating to the cases studied; the objective will be to place real time market trades, monitor the positions and evaluate the effectiveness of the strategy. Details of the expectations will be discussed in class to ensure participants fully understand the scope of the requirements as well as gain practical knowledge from case studies.


Class participation will be an important part of the course as we wish to simulate how to work inside a trading office. Usually it is a collaborative environment where coworkers are encouraged to share their ideas with the goal of finding the optimum strategy for the particular risk profile. Furthermore we will use the diversity of the class composition in order to utilise the nuances within different country settings such as Asia, North and South American, Europe and Russia. We wish to take advantage of the international mix to help all participants to further their knowledge and participation.

Final Report

Each student will pick an industry and job of their choice that utilises commodity futures trading. The report will provide details of the industry, job requirements and corporate goals. The student will develop strategies for that particular company to maximize profits while limiting risk associated to the industry. The goal of the report is to demonstrate your understanding of the risk profile and ability to provide strategies that will minimize risks while optimizing returns.

Peer Evaluation

Peer evaluation is an important part of the grading rubric because students spend a majority of the time for this class together outside of the classroom (trading a few hours each day). Each student will fill out a peer evaluation form for other students in the class. Peer evaluations will be weighted more heavily for team members (7.5%) vs. non-team members (2.5%). The instructor will explain the rationale behind such a peer evaluation and will go over the evaluation rubric during the first class.

Course Material

The material for the course will be available through UBC's Canvas learning platform.

Academic Dishonesty'

Please review the UBC Calendar “Academic regulations” for the university policy on cheating, plagiarism, and other forms of academic dishonesty. Academic dishonesty will be dealt with very seriously in this course.

More about the instructor: Carl Bayard

  • Over 30 years of experience as a commodity merchant and futures trader.
  • Practical knowledge trading basis and futures from having traded trucks, rail cars, containers and vessel quantities of products across all continents.
  • Working experience with line companies, crushers, ethanol plants, grain millers, fish processors, feed lots, hog and poultry producers as well as dairy farms.
  • Speaker appearances across North America and Asia in English, French and Spanish on the topics of futures trading and grain merchandising.