Agricultural Marketing Glossary: H, I, J, K -- June 2013 Edition

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H

HACCP – Hazard Analysis and Critical Control Point is a system of maintaining food safety that identifies potential physical, chemical, and biological hazards – called Critical Control Points - as a way of preventing safety risks instead of relying on inspection of the finished product. The HACCP process is used to identify possible food safety dangers so that processes can be implemented to reduce or eliminate the risk of the hazards being realized.

Handyweight - Slaughter carcasses in the weight range preferred by the market at the time, which are therefore not discounted.

Hard Spot - An interval of strength in the market, usually resulting from considerable buying.

Harden - A term indicating a slowly advancing market.

Heavy - A market when there are an apparent number of unfilled sell orders hanging over the market without a matching number of buy orders.

Hedging - A transaction carried out by a business using futures or options to minimize the risk of loss due to adverse price fluctuations. For a barley producer, for instance, a hedge could be a sale of Barley futures contracts done to protect against a price drop for a later cash barley sale. In the feedlot industry, a hedge could be a purchase of Barley futures contracts to protect against a price increase of a later cash barley purchase.

Hive - The physical structure that bees inhabit. In nature it could be a hollow tree.

Hog Cycle – The fluctuation in the size of the pig herd in response to biological and economic forces. The hog cycle is of shorter duration and not as clearly defined as the cattle cycle.

Hog/Barley or Hog/Corn Ratio – The number of bushels of No. 1 feed barley, or grain corn, that are equal in value to 100 lbs. of an index 100 live hog. The ratio is a basic measure of the relative profitability of feeding hogs since the higher the ratio the higher the price of hogs is compared to feed costs.

Hog Inventory Reports - Statistical reports released by Statistics Canada four times per year, estimating the number of hogs on farms by province and by class of hog. USDA releases similar reports for the United States four times per year.

Holder – The buyer of a put or call option.

I

In All Positions – A term used to describe the total amount or volume of a particular crop stored on farms, in all types of commercial elevators and in transit including rail cars.

Index 100 - A hog scoring 100 on the Canadian grading system is known as an “Index 100 hog.”

Index 100 Grading System - A grading system used for slaughter hogs in Canada. It is designed to give producers feedback on the quality of hogs they have produced. Hogs with above average qualities receive a higher index. The settlement price for each hog is calculated on the market price for an Index 100 hog multiplied by that individual hog’s index.

Initial Margin – Customer’s funds initially deposited with a commodity broker as security to guarantee customer reliability at the time a short (sell) or long (buy) futures market position is opened. The minimum amount of the initial margin is set by the exchange and may change at any time. It varies depending on the commodity, the contract value and the price volatility.

Initial Margin – Funds deposited by a customer with a futures commission merchant as security before a short or long futures contract is opened. Initial margins are a cash guarantee that the futures holder will not default.

In-the-Money – An option that would realize a profit, excluding the original cost of the premium, if it were exercised. For example, a November canola call option with a strike price of $300 per tonne is in-the-money if the Nov futures contract is currently valued at $320 per tonne.

Intrinsic Value – The amount that an option is in-the-money.

Inverse or Inverted Market - A futures market in which nearby months are trading at higher prices than a more distant month or months. Inverse markets occur in situations where supplies are currently in short supply or there is strong immediate demand and limited demand expected in the future. Normally, because of carrying charges (storage, interest, and insurance) on storable commodities, the highest prices are quoted for distant months. An inverse market is also known as a "premium market.” See “carrying charges” and “carrying charge market.”

J

Job Lot - An order of one futures or options contract representing 20 tonnes of grain or oilseed, as traded at ICE Futures Canada. See also “board lot.”

K

KCBT - The Kansas City Board of Trade. http://www.kcbt.com/

For more information about the content of this document, contact Erminia Guercio.
This information published to the web on July 20, 2007.
Last Reviewed/Revised on July 7, 2015.