ABSTRACT
Commodity marketing is a set of tactical management alternatives that focus on price risk management. The function of commodity marketing is to reach the broader business goals set in the Strategic Risk Management (SRM) process. EWS Farms specializes in grain production. Grains fit the definition of a commodity because it’s difficult to differentiate grain from one farm to the next. Unfortunately, commodity producers can’t set grain prices; if they tried, competitors would offer a lower price. Instead, prices arise from a process of balancing the year’s harvest and carryover stocks against buyers’ grain demands. EWS Farms’ managers believe risk management improvements can be made in their grain marketing.
