Commodities hedging has been around for nearly 150 years. Traditionally, it has been used to manage the risk of fluctuating prices or margins in commodities markets.
Companies producing commodities have a need to lock in future sales prices, allowing them to invest in the labor, materials and other assets needed to produce and deliver commodities in the future.
By Cesar Canali
In a marketplace where the only certainty is uncertainty, and most competitive advantages can be replicated, strategically positioning a business to win over time is easier said than done.
You may have experienced a scenario like this: the market price drops, negatively impacting your customer, who then turns to you to ask for a discount on price.
By: Rob Wolter
Blizzards during planting season and spring flooding.
Unpredictable political shifts and conflicts.
Pressures to buy lower than your competitors.
In the commodities markets, every fraction of a cent counts. When you’re dealing with large volumes, a few pennies can have a significant impact on margins, profitability and operating capital.
Go ahead, Google “hedging” or “financial hedging”—see what comes up on that first page.
Most likely you’ll find a vast list of articles that include technical terms or definitions of what hedging is and the role it plays in the finance world.
Eventually it’s bound to happen.
The bad trade.
If you’ve traded commodities, (we’ll use ethanol and corn markets as an example) for any length of time, you’ve probably experienced the emotions that come next.
First, regret. Wishing you hadn’t just made that bad trade.
In June, the Financial Accounting Standards Board (FASB) voted to proceed with finalizing the Accounting Standards Updates (ASU) for hedging activity. The final rules are expected to be announced in the next few months. Recognizing that our customers are impacted by these changes, Cargilll Risk Management’s Andrew Brodbeck asked Tim Potter at HedgeStar, a global firm based in Minneapolis, a few questions.
Increasing market volatility.
Mounting competitive pressures.
Changes in policy and regulation.
The pressures on today’s risk managers seem to grow by the day. As a result, the ability to feel confident in mitigating price risk when it comes to commodities or other asset classes may run pretty low from time to time.
Autor: Federico Stiegwardt
Desde hace más de 20 años, el término “VaR” es utilizado con bastante frecuencia por grandes bancos en todo el mundo. Esto se debe a que los bancos han estado utilizando el VaR (valor en riesgo) como una herramienta estadística para gestionar el riesgo de manera proactiva para sus clientes desde hace décadas.