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February' 2012

MF Global Bankruptcy

Farming is a business that involves a certain amount of risk, whether it be weather risk, disease risk, financial risk, marketing risk, etc., and most farm operators have developed strategies to manage those risks. One of the strategies that is used to manage grain and livestock marketing risk is to “lock-in” a profitable price for the grain or livestock that is being produced, using forward contracts or price “hedging” positions. One risk that farmers have never worried about is that the so-called “segregated funds” that they have in a grain or livestock hedging account would somehow be at risk. This all changed on October 31, 2011, when a company called MF Global Financial filed for bankruptcy. [ read more ... ]