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SIMULATIONS

For the sake of gold!

For the sake of gold!

Trade on the news flow

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Simulation of the For the sake of gold! contest   SC_CONC_BDF7H_US_V7

Scenario of the simulation

During the simulation, you will receive news about Bl de France, a French wheat producer whose shares are traded on the SimTrade platform. You will be able to buy and sell shares of Bl de France.

As a SimTrader, your goal in this simulation is to maximize your trading gains.

At the start of the simulation, you own an account consisting of €50,000 in cash and 500 Bl de France shares. Given yesterdays closing price of 100.35, the total value of your position is more than 100,000.

In this simulation, you can send all types of orders to the market: market orders (MKT), limit orders (LMT), best limit orders (BL), stop orders (STP) and stop limit orders (STL).

The duration of the simulation is initially set to 10 minutes, which corresponds to a 24-hour trading day. Using the timeline, you can increase or decrease the simulation speed at any time.

You must complete the simulation (up to 100%) for it to be considered in the ranking. You can always improve your ranking by launching again the simulation (until the maximum number of launches allowed for this contest).

Grading

Your grade for this contest simulation takes into account the following elements:

  • Your participation in the contest by completing the simulation (up to 100%): 10 points of participation

  • Your ranking based on your trading relative performance during the simulation: between 0 and 90 points according to your place in the ranking.

Bl de France

Bl de France is a French wheat producer. The firm was created in 1780 by the Turgot de la Beauce brothers, nephews of the famous financial controller of the King of France Louis XVI. The firm is still managed by a descendant of the founders, Charles-Louis Turgot de la Beauce, who is an emblem of the cereal industry in France.

Bl de France fields are mainly located in the Beauce area in the center of France.

The sales structure is composed of two parts:

  • Long-term contracts: commitment from Bl de France to sell to food-processing firms fixed quantities of wheat (total of 5 million tons per year) at a fixed price (average price of €300 per ton) for several years

  • Sale of the rest of the production on the international wheat market at the market price.

To better understand the impact of the quantity of wheat harvested by the Bl de France and the price of wheat in the international market on the sales of Bl de France, you can study its revenue model (Excel file).

Evolution of the stock price

The ticker symbol for Bl de France shares traded on the market is BDF.

Bl de France was introduced in the French stock market in the 1970s. During the past few years, its stock price soared. This strong price increase can be partly explained by the strong increase in the wheat prices at the world level.

Over the recent period, following the strong increase in the price of wheat, the BDF stock price has jumped to a record level of €140 a few months ago. It then fluctuated around that level depending on the news flow about the company and the price of wheat.

The current market price is around €100.

What will happen today...

Today is an important day for Bl de France, as the firm will hold its annual General Meeting. Charles-Louis Turgot de la Beauce, CEO of Bl de France, will announce the profit for the last year. The expectation from the market consensus is an annual profit of 700 million for Bl de France. How much profit is Bl de France going to announce?

During the General Meeting, Charles-Louis Turgot de la Beauce, should also give an update of the expected level of the harvest for this year. The latest figure announced by the company was a predicted harvest level of 7 Mt. Along with the price of wheat in the international market, the quantity harvested by Bl de France every year is the main driver for the yearly revenues and profits of the company. The main underlying risk factor which explains the valuation of cereal producers like Bl de France, is the weather and its consequences (floods, droughts, fires...). The Food and Agriculture Organization (FAO), a specialized agency of the United Nations, regularly informs market participants about the weather. Other risk factors are the appearance of diseases, the political events around the world, etc.

Bl de France has responded to the tender of McD Fast food (a fast-food giant) to sell wheat for the production of buns for burgers. The result of the call for tender must be announced by the end of the day. If Bl de France wins the tender, this will result in substantial profits and, according to the market consensus, BDF stock price could jump by 10 %. Otherwise, Bl de France will remain subject to the uncertainty of the (unfavorable) economic situation and BDF stock price is expected to drop by 10 %.

You can read the market consensus on Bl de France to know more about the market participants expectations about the company.

   About the authors of the simulation   

Gabriel Eschbach
ACE Finance & Conseil

“The key is knowing how to process information. The market is anticipating what will happen, but things never happen as expected. The market reacts to the rumor and adjusts to the news. And you! What do you expect? How will you react? What are you going to do?”

Professor Franois Longin
ESSEC Business School

“Before launching the simulation, remember that the market is always right and that the market is always right, even when it is wrong...”