IFB 2014 Commodity Challenge Description

Buy! Sell! Trade! We've all made bad marketing decisions ... or been left with regrets on a selling choice. Now you'll have a chance to practice, at no expense to you. The 2014 IFB Commodity Challenge lets you trade commodities real time on the cash, futures, and options markets ... without losing a dime! What you do gain is knowledge ... to better understand the mechanics of pricing crops in today's fast-paced agricultural world.

You will be given 100,000 bushels of corn and 30,000 bushels of soybeans to market on the cash, futures and options markets. Following the harvest date of September I, 2014 established in the game storage costs will accrue at four cents, per bushel, per month for any bushels not previously sold. Cash prices are based on the same grain elevator's daily bids. You make decisions like how to manage price risk, and determine the best way to market your crop. Should you sell to a local cash market? Or will you use futures contracts to establish a price for delivery later in the year. Will you use options contracts to establish a minimum price? The choice is yours.

Prizes are awarded to the top three winners in four divisions. Divisions include Overall, Young Leaders, Women, and Collegiate. First prize in each division is $1,000. Second place nets $500, and third place earns $250. IFB and CME Group employees are ineligible.

The contest runs from January 2,2014 to November 28,2014. Registration is open through March IS, 2014. Winners will be determined by calculating the highest cumulative value of cash grain sales, hedging gain/loss, and option trade gains/losses for all commodities at the completion of the game November 28,2014. Winners will be announced at IFB's 2014 Annual Meeting.

Game details: • Crop size to market: 100,000 bushels of corn and 30,000 bushels of soybeans • Storage costs will accrue at rate of 4 cents/bu/month for bushels unsold prior to

September I harvest date • $60 round turn commission costs for futures or option trades per contract • Cash grain quotes are from Heritage Grain in Dalton City, IL • Trading begins January 2, 2014 • Trading ends November 28,2014 • Cash prizes in each of 4 divisions;

o 1st place; $1,000 o 2nd place; $500 o 3rd place; $250

• Divisions (you can only compete in one division) o Overall Division o Women's Division o Young Leader's Division o Collegiate Division

NO PURCHASE NECESSARY. Open only to existing Illinois Farm Bureau® (IFB) members age 18 or older who are legal u.s. residents (except RI, FL, NY, and AZ). Void where prohibited by law. Participation in this promotion is no guarantee of future performance in commodity marketing or trading. IFB and CME Group employees and their immediate families are ineligible. One entry per person. Sponsor: Illinois Agricultural Association®, 1701 Towanda Avenue, Bloomington, IL 61701. See Official Rules for details.

2014 IFB Commodity Challenge Registration

To register: • Go to www.commoditychallenge.com

• Click; o "Join" button to create a new account. You'll need to supply an email

address, name, address, and password, or o "Sign In" button if you've previously created a Commodity Challenge

account • Once you've signed in click the "Find a Game" button • Select the IFB game you wish to compete in: (IFB games won't be listed until January 2)

o IFB Overall Division o IFB Women's Division o IFB Young Leader's Division o IFB Collegiate Division

• The password to join each game is "Membership" • That's all there is to it. You're ready to start trading and improving your

marketing skills. And maybe win some cash! • Use the green "Cash ", "Forward", "Futures ", and "Options" buttons to

enter your marketing orders • Use the "Summary", "Positions ", "Open Orders", and "Transactions" tabs

to track your positions and progress • Take advantage of other features offered on Commodity Challenge • If you have questions click on the yellow "Contact Game Leader" button

NO PURCHASE NECESSARY. Open only to existing Illinois Farm Bureau®(IFB) members age 18 or older who are legal u.s. residents (except RI, FL, NY, and AZ). Void where prohibited by law. Participation in this promotion is no guarantee of future performance in commodity marketing or trading. IFB and CME Group employees and their immediate families are ineligible. One entry per person. Sponsor: Illinois Agricultural Association®, 1701 Towanda Avenue, Bloomington, IL 61701. See Official Rules for details.

Futures Farming

Grade Level: 4-8

Objective: Students will demonstrate an understanding of marketing farm commodities by selling them (represented by M&M's candy) for a profit, demonstrate the ability to equate simple math functions, observe the challenges a farmer faces when marketing commodities by completing a hands-on activity, and define terms: commodity, acre, bushel, futures, expenses, profit and crop.

Common Core: Language Arts: CCSS.ELA-Literacy.RI.4.2; RI.4.6; W.5.1; SL.4.1; Mathematics: CCSS.Math.Content.4.0AA3; 7.SP.A1

Suggested Reading Materials: What is Scarcity of Resources? by Jessica Cohn I ISBN: 077874261X What is Trade? by Carolyn Andrews I ISBN: 0778742636 What is SU]2]2ly and Demand? by Paul Challen I ISBN: 0778744574

Introduction: A lot of planning goes into the sale of a farmer's crop. In order to make the most money, a farmer must predict when he will receive the best price for his or her crop, even before the crop is harvested. This is called "futures" because the prediction the farmer makes is based on the future. The futures market can be both complicated and risky. In this activity, students will see if they are good predictors with their "crop" in hopes of making the most money. Share these definitions with your students before starting the activity:

• Futures:

• Crop:

• Commodity:

• Acre:

• Bushel:

• Expenses:

• Profit:

Commodities or stocks bought or sold upon agreement of delivery at a later time. A farmer only gets paid when he or she sells a crop. That payment may only be once a year (after harvest in November) or if he or she sells the crop before it is harvested - "future."

The total yield of agricultural produce in a given season or place. A commercial article, especially an agriculture or mining product, that can be transported. Portion ofland about the size of a football field. How the crop is measured; can be measured by weight or amount.

Items the farmer must pay for in order to stay in business; examples: Electricity, gasoline, taxes, chemicals.

Amount of money made after expenses are paid.

What You Will Need:

• "Futures Farming" Worksheet

• 1.4 oz bag of M&M' s (per student)

• Calculator

Futures Farming

Activity Instructions:

1) Introduce the "Farmer's Dilemma" activity by reading the introduction at the beginning of this

lesson. Then place the terms given in the introduction on the board or overhead. Define the

terms as a class or have the students do this individually.

2) Pass out the bags ofM&M's and the worksheets. Do not oven the M&M's! Using their

worksheet and candy, students need to estimate how many M&M's of each color they think

might be in their single bag before opening it.

3) Discuss the term "futures" that the students defined earlier. A farmer has the opportunity to sell

his/her crop before they harvest it. For example, if the farmer thinks he might have 150 bushels

of corn to sell in the fall, he might sell 100 bushels ahead of time at a higher price.

a) Why wouldn't the farmer want to sell all 150 bushels at a better price? Answer: There might

be a drought, flood or wind damage that could hurt the farmer's yield, he or she might not

harvest 150 bushels of corn. In order to make money, that farmer must have the number of

bushels he or she sold ahead of time, otherwise he or she loses money. It is like borrowing

money; someday you have to pay it back. Remember, the farmer is taking a risk like the

students are doing with their candy. Imagine taking a risk with thousands of dollars, not just

candy.

4) Complete Step 3 on the worksheet.

5) Have students open their M&M's. No snacking yet. Complete Step 4 on the worksheet.

Students may eat their candy when the directions on the sheet indicate to do so.

6) Complete Step 5 and finish the activity.

Discussion Questions:

1) How many of you realized that a farmer only makes money at certain times of the year?

2) How is the method of payment different than when some of your parents receive their

paychecks?

3) What are some school subjects a farmer must be familiar with or understand well?

4) How would budgeting funds come into play in a farmer's family life?

STEP 1:

Futures Farming WORKSHEET

Do not open your bag of M&M's yet. Predict how many of each color o f i'vf&J\t['s candy you will get in your bag. You will have approximately 55-60 M&M's In the bag.

Blue Brown Red Orange Yellow G reen ___ _

STEP 2: This is the pre-harvest phase. \'Vould you like to sell your crop (or M&Ms) before you harvest it and get a premium price for you r commodity? Let's say your teacher (or grain elevator) will pay $4.50 now or S4.00 once you o pen your bag. Your teacher will also pay $4.75 for green M&M's or ~4.25 afte r the bag is o pened.

Pre-sold corn: Place the number you wish to sell in the first blank.

Blue Brown Red Orange Yel low Green

Total Sold:

STEP 3:

x $4.50 = __ _ x$4.50= __ _ x$4.50= __ _ x$4.50= __ _ x$4.50= __ _ x $05 = __ _

To tal Made: $, ___ _

111is is the harvest phase. Open your bag, but do n' t cat the candy yet. Count how many actual M&M's you have of each color. Se t aside the pre-sold M&M'5. Record the remaining number of M&J\'i's (not pre-sold) below.

Blue Brown Red Orange Yellow Green ___ _

Blue Brown Red Orange Yellow Green

Take the in fonnation obtained above and use it below to find out how much money you made on the M&M's that were not pre-sold . I f you ove:sold any color, place a zero in the space below.

x$4.00 = __ _ x $4.00 = __ _ x $4.00 = __ _ x $4.00 = __ _ x$4.00= __ _ x$4.25 = __ _

'f otal Made: $, ___ _

Futures Farming

WORKSHEET CONTINUED

Add together the totals you made either from se ll ing you r cro ps at $4.50 o r $4.00 (or green candies at $4.75 or $4.25).

Vou may eat the rest o f the candy you have left.

Overall total, $ ___ _

STEP 4, Did you oversell any com? Yes No

If yes (any color od1cr du n green), how many? x $4.50 ;::: ___ _ If yes (green only), how many? x $4.75 ;::: ___ _

T otal Oversold

Overall Toml, $ ___ _ Total Oversold s Final Questions:

1. How many of each color did you oversell?

2. Did you make good choices when it came to the predictions?

3. Which commodity had the highest amount sold?

4. What can you do differently if you were to do it again?

5. What did you learn about farming whil e doing this lesson?

6. Wha t was one thing that su rpnsed you abou t fa rming?

7. As a class, discuss your answers at the end of the worksheet. Figure out who made the most profit and who owed the most. Explain why these students made the most or lost the most. Compare and contrast each student's outcome. Focus on the deta ils an descri be the differences and similarities .

8. What is one thing that surpri sed you about your predictions and actual calculations?

9. \Vhat did you learn about risk-tlking? In your opinion, is it :1lways better to t lke a risk? Was your o pinion the same before the activity?

10. Wha t was your favorite thing about d1is mini-uni t?

Futures Farming

Extension Activities:

Avcr'.t.gcs Group students in te am s. Have the s tudents calculate the following:

• Average to tal M&M's • Average M&l"l's of each color • Average $ made from pre-sold • A verage $ made not pre-sold • Average overall S made

Use the averages to an swer the followmg two questions.

1. \'<'hat trends clo yo u notice as a group? As a class? 2. In gen eral did the group take more risks, or were they less a sky? 3. \'Vhy is it important to calculate averages? Would this help in deteoruning the risk?

Graph 1 tOut H ave each student create several graphs to displ ay th eir colo rs from th e bag ofM&M's.

• Bar Graph-Create one to sho w a side by side representation of each co lo r in your bag. Then create a second bar graph to show how many of each color we re pre-sold and sold.

• Pie Chart-Create tlllS to show a pe rcentage of the overall to tal for each color.

Compare yo ur grap hs and charts \vith o ther studen ts in the class . \'\!hat similarities and diffe rences do yo u see amongst the ch arts?

As a class, create the same graphs and charts for the overall averages.

Discuss Witll the students \vhat they liked and did not like about the mini-umt. Have them give nev,,· ideas about \vhat could be added and what sho uld b e changed about it. If possib le , have a speaker come in to talk about faoning. The studen ts would m ost likely ge t a lot more infoonatio n about the topic, and it will clan fy any other questio ns the teacher cannot answer.

E ach student sho uld write two paragraphs explaining the main idea of the unit. E xplain using details from the te xt and lesson .

S ta tis ti cs USll1g the infonnation gained from the unit. Have students chart statistics from their p opulation of M&M's. Explain the odds of d raw1l1g each color from the bag at random. Use t1us data to draw inferences. \Xfhat are the odds of randomly selec ting each color? Which is most likely?