Grain Alpha-Pit traders needed

Discussion in 'Professional Trading' started by zf trader, Dec 12, 2005.

  1. I just got a call from a friend of my from Leftbridge Alberta. He is heading up a group of farmers who have formed a marketing group. I have suggested that they use the "portable alpha" approach. That is that they lock in the price of the crop for 95% of their cash flows and use 5% of cash flows as margin for a trading account that would attempt to outperform their static hedge of short grain futures and long Canadian dollars.

    To find this alpha for grains capital needs to be placed with someone in the pits who pays member rates. Does anyone know of a hedge fund or CTA or someone else who can generate alpha in down grain markets. Someone who trades a long gamma strategy would be preferable. It would also be better if they didn't get short theta.

    Finding alpha for $C should be easier as a great deal of the trade is electronic. Any help in pointing me in the direction of someone who could do this for me would be appreciated
  2. will2205


    What kind of grain are we talking about here?
  3. mcurto


  4. will2205


    Wheat, corn, beans?
  5. Thanks guys.
    They grow a lot of feed barley in Lethbridge. There is even a future for Lethbridge delivery on Winnipeg. They also grow alot of wheat and I am trying to get more information on types and usage. I farm in Ontario and things are different out west.

    They also grow pulse crops in the area but the hedging mechanism would involve OTC trading.
  6. will2205


    If they're growing spring wheat bring you business to minneapolis.
  7. ellokn


    You might want to contact the folks at the Winnipeg Grain Exchange.

    They will be happy to talk to you and neutral.
  8. I know one top notch market mind that would know of some people.

    Howard Simons is a tremendous resource for both delta hedging, and dynamic hedging and knowing the top commodity folks in the business.

    contact him at

    He may be able to help you. If not read his book, he shows over 200 ways to hedge corn and shows you how to determine the best hedge.
  9. Oh God! The dreaded "Texas Hedge"! The farmers should keep 95% of their pooled money for hedging their crops and merely use the remaining 5% to buy deep-out-of-the-money August Soybean call options at the end of March. If a "weather market" develops, the calls will explode in value and provide the "gravy" that the farmers are looking for once every 3 or 4 years.
    #10     Dec 18, 2005