WWW.CommodityChallenge.com:

Internet Marketing Game Simulates Futures, Options Without Actual Price Risk

Heard of fantasy football? Now, there’s fantasy grain marketing: A way for producers to gain practical experience managing grain marketing price risk with futures, options, and cash sales in a realistic virtual environment, without any real financial risk. All you need is access to the Internet.

The Montana Grain Growers Association’s MarketManager program and the Montana Cooperative Extension Service have developed Commodity Challenge, online at www.commoditychallenge.com , as a commodity marketing simulator. Other cooperators in its development: Minnesota Association of Wheat Growers, University of Minnesota, Idaho Barley Commission, Texas A & M University, University of Idaho, and the University of Wyoming. The program is funded in part by the Western Center for Risk Management Education http://westrme.wsu.edu .

With Commodity Challenge, participants make simulated trades on futures, options, and local cash markets. They trade commodities grown in their local area to learn about hedging, futures and options trading, and marketing strategies.

You begin the simulation with a set quantity of three different commodities produced in your area. At the start of the simulation, you are guided through the process of writing a marketing plan. Throughout the course of the simulation, you may make trades on the futures and options markets as well as your local cash markets. A built-in profit/loss calculator tracks your current status. You can compete with other participants in your area to achieve the greatest profits and test your marketing skills.

Key features of Commodity Challenge:

Intra-day Trading: Trade orders are filled every ten minutes. You will get a realistic feel for the volatility of the markets.

Realistic Order types: Place “Market,” “Price-or-better,” or “Stop-loss” orders

Market News: Opening calls and updates from Doane throughout the day.

Marketing Plan Wizard: Develop a marketing plan that works for you.

Local Cash and Basis Charting: Generate detailed charts of your local prices and basis.

Local/regional prices: With hundreds of cash market locations across the country, you can select a simulation that applies directly to your needs.

Competition: Participants are able to test their marketing skills against others, with standings updated daily.

According to Alex Offerdahl, coordinator of Montana MarketManager, surveys have shown that most producers consider marketing to be among the most challenging tasks they face. While producers understand that locking in just a few cents more per bushel or pound can make a large impact on their profitability, they have also heard horror stories of farms lost to marketing mistakes. Commodity Challenge gives participants an opportunity to try marketing strategies in a realistic environment without risking any real money.

Commodity Challenge was initially created in February, 2002 as a pilot project in Montana. Over 130 participants in Montana marketed hypothetical production of winter wheat, spring wheat, barley and feeder cattle over a two-month period. During this time, participants executed over 2,000 simulated trades on the commodity futures, options and cash markets. Just as in real life, participants paid mock commissions on trades and fees for stored crops while selling on their local cash market prices. They locked in prices, managed risk and executed their marketing plans in a realistic simulated trading environment.

Over half of those participants said they are now more likely to use futures and options risk management tools, and two-thirds said they are now more likely to develop a marketing plan. “Commodity Challenge is the best learning tool for marketing that I’ve found,” says Joe Von Stein, a Cascade, Mont., producer. “It has improved my skills and my confidence in my decisions. After watching flat markets for three years, I am finally excited about marketing again!” 

Commodity Challenge will be launched nationally in September, 2002, with several thousand participants expected.  To register, go to www.commoditychallenge.com on the Internet. Click on the button labeled “sign up,” and follow the registration steps.  There is no cost to participate.