A large audience tuned in Nov. 18 for A Year after the Crash ?Çô Managing Risk in a Volatile Fertilizer Market, a 90-minute interactive audio conference sponsored by Green Markets. The event allowed registrants to listen via telephone as three risk management experts discussed a range of techniques to mitigate pricing and supply risks, and also to ask questions in a live format at the conclusion of the panel discussion.
The speakers assembled by Green Markets included Bruce Vernon, vice president, fertilizer, for Viterra Inc. AgriProducts Group; Alexey Paliy, director of fertilizer derivatives for FIS Investor Services; and Ryan Sherwood, price risk management consultant for FCStone. Topics included in-depth looks at hedging strategies, cash settled swaps, and option contracts, as well as strategies to offset high input costs at points further down the distribution chain.
“Risk and volatility go hand-in-hand,” said Paliy during his presentation, noting the wide swings in fertilizer pricing observed over the last 18 months. Sherwood used examples to illustrate inventory and forward sale hedges, and also discussed option contracts and the risks that accompany them.
Vernon talked of a “return to normalcy” in recent pricing activity, but detailed as well the significant decline in application rates that accompanied the earlier spike in fertilizer prices. “Farmers will react to higher prices by considering alternatives,” he said. Vernon also talked of forward contracts to provide farmers and retailers with risk management options.
An audio recording of this event is available on CD-Rom for $199. This and past Green Markets Webinars can be ordered by visiting http://www.pf.com/events.asp.