Commodity procurement risk management using futures contracts : a dynamic financial hedging approach with multistage rebalancing

2011 ◽  
Author(s):  
Jian Ni
Keyword(s):  
Risk Management ◽  
Futures Contracts ◽  
Financial Hedging ◽  
Procurement Risk

AGRICULTURAL FINANCE REVENUE FUTURES CONTRACT

2004 ◽  
Vol 07 (02) ◽  
pp. 85-99 ◽  
Author(s):  
MARTIAL V. GUINVARC'H ◽  
JACQUES JANSSEN ◽  
JEAN E. CORDIER
Keyword(s):  
Risk Management ◽  
Crop Yield ◽  
Management Strategy ◽  
Financial Intermediation ◽  
Futures Contracts ◽  
Financial Intermediary ◽  
Agricultural Finance ◽  
Futures Contract ◽  
Put Option

To respond to financial compound risk of farmers, two multiplicative derivative contracts, called respectively revenue futures contract and revenue put option, are proposed. The paper presents the theoretical management strategy of such a contract under the constraint that price and crop yield futures contracts are quoted. A financial intermediary can thus develop a risk-free management strategy to build a revenue futures contract. This paper opens perspectives on risk management for farmers, on completeness of markets and on new financial intermediation.

RISK MANAGEMENT OF DOMESTIC COMMODITY PRODUCERS USING STOCK MARKET INSTRUMENTS

2019 ◽  
Vol 4 (3) ◽  
pp. 94-101
Author(s):  
Oleh TIAHNYRIADNO
Keyword(s):  
Risk Management ◽  
Production Efficiency ◽  
Stock Exchange ◽  
Management Strategies ◽  
Developed Countries ◽  
Futures Contracts ◽  
Internal Factors ◽  
Market Participants ◽  
Constant Change ◽  
Risk Management Strategies

Introduction. One of the peculiarities of Ukrainian agrarian market functioning is the growth of uncertainties, whose impact has increased significantly as a result of globalization processes. The constant change of external and internal factors causes risks, which become the main problem of management, as they determine the directions and production efficiency and agricultural products sale. Therefore, there is a need to apply progressive risk management methods and tools that are effective and efficient under current conditions. Companies use derivatives (trusted derivatives) to turn their cases around and limit uncertainty about future businesses for revitalization. Therefore, derivatives are actually invested in some economies and make their effectiveness for a higher level of valuable assets in the course of exchange trading. The purpose of the article is to substantiate scientifically theoretical positions and methodological approaches, to develop alternative risk management strategies through stock exchange instruments, namely types of derivatives – options. Results. The importance of theoretical bases formation of the risk essence is substantiated that can be faced by domestic producers. The ways of uncertainties occurrence, stages of their transformation are explained. The theoretical approach to risk management through the use of futures contracts is systematized. The historical stages of using derivatives development have been evaluated. The new approach to risk management is proposed through the use of the optional Collar strategy. Conclusions. Any business activity is unthinkable without risks in developed countries, so any manufacturer seeks to insure its risk, including through a fixed market. The terminal market allows for redistribution of risks among market participants, on which a particular derivative operates. The advantage of derivatives is the leverage that allows participants to operate large amounts of risk management funds, including hedging their own products. Keywords: risk, risk management, risk management, hedges, options, futures, derivatives, derivatives.

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