Tim Andriesen, CME Group, Says This Year a Great Example of Why Risk Management Tools Are ImportantMon, 30 Nov 2020 09:01:01 CST
This year is ending much differently than it started said Tim Andriesen, managing director, agricultural products for the CME Group
Andriesen was recently interviewed by Radio Oklahoma Agriculture Network Associate Farm Director and Editor KC Sheperd.
Coming into this year we thought this was going to be a dull year, he said, and then COVID-19 hit, and the markets turned on its end.
Add the demand shifts and weather challenges, Andriesen said ff there was ever a year for risk management this is it.
What’s important in a year like this is to understand risk management tools to lock in price without selling the actual product, he said.
These tools give you a lot more flexibility, he said.
The biggest surprise this year was how the markets reflected what they thought was going to happen and allowed people to do something about it, Andriesen said.
It gave people the chance to manage risk, he added.
As we usher in a new administration, Andriesen said the market is trying to understand what the changes in trade policies could be.
The question is there going to be a change in how the U.S. deals with China, he said.
I am not sure what the answer is but there is a lot of volatility in the market because of that uncertainty.
We’ve haven’t become more certain, but we need to make sure we manage that risk, he said.
As parts of the world return to normalcy while the U.S. continues to struggle to control COVID-19, Andriesen said there is a definite market impact.
I think it does in the sense when there is uncertainty anywhere in the market it has an impact, he said.
Looking ahead to 2021, the CME official said a new risk management tool for hog producers holds great potential.
There is one thing we’re really excited about for hog producers using formula prices based not just on hog prices but also the cutout values markets, Andriesen said.
Two weeks ago, we launched a pork cutout futures contract, he said.
I think it is something that will become more of a valuable tool for hog producers to manage their risks, he said.
Click on the listen bar below to hear more of KC’s interview with Tim Andriesen.
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