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Corn+Soybean Digest

Second Place Marketmaxx Winners Talk Shop

Chip Shriver was looking for help to teach his son about grain marketing. He found it with MarketMaxx 2007. And he earned a free complete computer system when his own corn marketing savvy paid off.

Kevin Johnson's soybean marketing strategies were also rewarded by MarketMaxx, as he joined Shriver as a runner-up in the corn and soybean marketing game from Corn & Soybean Digest.

MarketMaxx 2007 attracted about 7,000 players, each with a simulated 100,000 bu. of corn and 50,000 bu. of soybeans to trade via the Web site. After the final trades were tallied, Shriver and Johnson had the second highest average prices. They won complete computer systems from Syngenta Crop Protection.

MARKETMAXX 2008 sign-up is underway. And most players indicate they don't normally use the same strategy for MarketMaxx as their actual corn and soybean trades. Shriver, however, used an options program to score early premiums in both the game and some of his real-life marketing.

His average corn sale price in MarketMaxx was $4.28.27/bu. for the contest that ended Oct. 31, 2007. “We started the game late and began making trades in late February and early March,” says Shriver, 51, Ursa, IL, who played the game with his son Matt. “We used both call and put options and futures.”

Corn puts and straight futures hedges locked in strong prices for them early on. Call options on additional bushels enabled Shriver to capture market rallies. “We gained from the time value of the calls,” he says.

In normal marketing, the Shrivers don't buy options. “I want to be selling options, not paying for them,” he says. “When grain's in the bin, it's important for it to be working for you every day. You have to make early sales and hopefully go way above the market and sell out-of-the-money calls. You can pay for your interest in bin storage until grain moves and you have a chance for a better profit.”

JOHNSON'S $11.40.25/BU. overall sale price for his MarketMaxx beans involved buying, not selling, call options. He took that route after expecting soybean prices to escalate throughout the year.

“We bought deep in the money calls early, probably in the $6 range,” he says, following his first year of playing MarketMaxx, which he discovered while reading Corn & Soybean Digest. “I expected prices to climb all year, so we stayed long on the calls.”

After a summer slip, November 2007 soybean futures kept climbing toward the $10 level and beyond. Johnson captured premium value on the calls and ended the MarketMaxx game with the $11-plus price.

“There is often risk when you buy options,” says Johnson, who farms with his brother Dan in a partnership that includes about 1,000 acres of corn and 1,000 acres of soybeans.

“I've traded futures for 25 years and found that you often lose your premium when buying options. But that's one thing good about MarketMaxx, you can have fun with it and it's a good program to help people get familiar with the mechanics of trading when there's no risk involved.”

Johnson normally markets most of his actual soybeans and corn early in the year. “I sell more on time than price,” he says. “ I like to have a lot of the crop sold by planting time. With prices where they are now, I expect to sell a lot and early for the next two to three years. It's a good enough market; a guy doesn't want to lose this opportunity.”

Shriver, whose family farms about 700 acres of corn, 300 acres of beans and runs a 500-head dairy, was introduced to MarketMaxx by his son Matt, 22. “He had been on me for two years to explain how options work,” says Shriver. “He mentioned MarketMaxx to me. We started playing and it was a good way to show him how options really work.

“Until someone experiences it, they don't fully understand how time value works on an option. MarketMaxx helps show how options work,” Shriver says.

Matt, who has his own MarketMaxx account, notes that he didn't take marketing classes in college. “But this game is probably better because it's real time,” he says, adding that he usually monitored his account at least twice a week.

“The game gave Dad and me a common interest on something to do together. It brought us closer together,” he adds.

Johnson followed the MarketMaxx leaderboard to the end and knew he had a good chance of winning. He also gained more knowledge of how the markets functioned, even after his two decades of trading. “If you're not familiar with trading, MarketMaxx is a good teaching tool,” he concludes.

To get signed up for MarketMaxx 2008, go to The Web site guides you through setting up your MarketMaxx account, helps with trading your simulated 100,000 bu. of corn and 50,000 bu. of soybeans and provides other information to help you become a better marketer.

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