Course:FRE517

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Futures Trading of Agricultural Commodities
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FRE 517
Section: F2F
Instructor: Carl Bayard
Email: carl.bayard@ubc.ca
Office: TBA
Office Hours: TBA
Class Schedule: Feb 28 to April 8

Mondays 1:00-4:00 pm

Classroom: MCML 154
Important Course Pages
Syllabus
Lecture Notes
Assignments
Course Discussion



Course Goals

  • To gain practical knowledge on to use commodity Futures & Options both to manage risk and for speculative purposes.
  • Using the CME Futures trading simulator to practice Futures trading for both risk management and speculation while using technical and fundamental strategies of your choice.
  • Using Futures & Options contracts as merchants, traders and portfolio managers in the areas of:
    • Grain companies that merchandise crops.
    • Oilseed crushers that trade edible/industrial oils as well as livestock feed.
    • Corn distillers that trade ethanol and livestock feed.
    • Grain millers that trade flour and livestock feed.
    • Lumber trading from a Canadian perspective.
    • Electricity trading from a Canadian perspective.
    • Options trader working for a bank's investment division.
    • Freight Forward Agreements (FFA)

Grading

Activity Date Percent of Grade
Assignments Weekly trade updates 50%
Class Participation Throughout the 6 classes 20%
Final Report Due 2 weeks after the end of class 30%
Total: 100%


An emphasis will be placed on using the CME simulation platform in order to get practical experience and applications in various industries and settings (50%), class participation (20%) and a Final Project (30%).

Course Setup

The first three classes are geared towards building an understanding of how agricultural commodity merchants use Futures as a tool to hedge their purchases and sales in order to convert their transactions into basis trades. We will then move into industry specific examples that relate to grain & oilseeds, canola crushing, corn ethanol, wheat milling, electricity, lumber oil & gas, and finally bulk ocean freight trading.

During each class students will be asked to participate in the discussions that relate to industries as stated above. Although agricultural commodity hedges are used to minimize risks, it is crucial that students grasp the importance of spreads, price supports and resistance, all while demonstrating an understanding of basis trading.

CME Group's Trading Simulation

CME Group provide an excellent tool which we shall use on a weekly basis to practice commodity futures. The goal here is to trade a minimum of 10 trades per week. The available funds are US$100,000. Each student must execute a minimum of 10 trades per week using the CME simulator. The goal will be to state the objective of the trade (hedge or speculative) while describing the industry settings. Examples shall be given in the first class to provide ample details to meet the expectations. Keeping a journal will be key as it will be used to prepare your final report.

Understanding the importance of foreign exchange on US$ futures (proportional hedging) will be crucial.

Participation

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 utilize 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. Those who speak up will be recognized accordingly. 

Final Report

Utilizing your weekly trade updates you will create a report that highlights three main areas:

  • How Futures & Options Trading exposed you to an industry where you can see yourself work and why.
  • A detailed description of the differences between theoretical and practical applications in Futures & Options Trading.
  • A one page resume on why I should hire you as a Futures & Options Trader in my company.

Visit Port Metro Vancouver

COVID permitting hopefully during class No. 4 we will meet at the Port Metro Vancouver offices where we shall get an overview of port activities as well as experience a private visit of their logistics and operations team. This part of the course may require some adapting to ensure we follow health protocols at the time. More to follow.

Course Material

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

Academic Misconduct

Academic dishonesty and plagiarism are taken very seriously in the MFRE program and can result in a range of punitive measures, which could include failing the program. It is each student’s responsibility to review and understand what constitutes academic dishonesty and plagiarism and how to avoid them.

Academic honesty is essential to the continued functioning of UBC as an institution of higher learning and research. All UBC students are expected to behave as honest and responsible members of an academic community. Breach of those expectations or failure to follow the appropriate policies, principles, rules, and guidelines of the University with respect to academic honesty may result in disciplinary action.

Academic misconduct that is subject to disciplinary measures includes, but is not limited, to the following:

  • Plagiarism, which is intellectual theft, occurs where an individual submits or presents the oral or written work of another person as his or her own. In many UBC courses, you will be required to submit material in electronic form. The electronic material will be submitted to a service which UBC subscribes, called TurnItIn. This service checks textual material for originality. It is increasingly used in North American universities. For more information, review TurnItIn website online.
  • Cheating, which may include, but is not limited to falsification of any material subject to academic evaluation, unauthorized collaborative work; or use of unauthorized means to complete an examination.
  • Submitting others work as your own, may include but not limited to i. using, or attempting to use, another student’s answers; ii. providing answers to other students; iii.  failing to take reasonable measures to protect answers from use by other students; or iv. in the case of students who study together, submitting identical or virtually identical assignments for evaluation unless permitted by the course instructor.
  • Resubmission of Material, submitting the same, or substantially the same, essay, presentation, or assignment more than once (whether the earlier submission was at this or another institution) unless prior approval has been obtained from the instructor(s) to whom the assignment is to be submitted.
  • Use of academic ghostwriting services, including hiring of writing or research services and submitting papers or assignments as his or her own.

Student Responsibility: Students are responsible for informing themselves of the guidelines of acceptable and non-acceptable conduct for examinations and graded assignments as presented via FRE code of conduct guidelines; course syllabus and instructors; and UBC academic misconduct policies, Review the following web sites for details:

Penalties for Academic Dishonesty: The integrity of academic work depends on the honesty of all those who work in this environment and the observance of accepted conventions. Academic misconduct is treated as a serious offence at UBC and within the MFRE program. Penalties for academic dishonesty are applied at the discretion of the course instructor. Incidences of academic misconduct may result in a reduction of grade or a mark of zero on the assignment or examination with more serious consequences being applied if the matter is referred to the Dean’s office and/or President’s Advisory Committee on Student Discipline. Note: If a student needs to extend his/her program due to a failed course or unsatisfactory progress, they will have to pay the full MFRE tuition fees for that term/s.

More about the instructor: Carl Bayard

  • More than 30 years of experience as a commodity merchant and futures trader.
  • Practical knowledge trading basis and futures from having traded trucks, rail cars, containers 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. 
  • President of the Vancouver Grain Exchange.