Subject Database

Subject Code:	AGR3CRM
Subject Short Title:	COMMODITY RISK MANAGEMENT
Credit Points:	15
Subject Description:	The subject introduces concepts of agribusiness, idealistic product differentiation marketing and the global agribusiness environment. Risk is examined and the need for forward markets to offset this risk is explained. Problems with supply chain integration will be detailed, which requires parallel markets to offset price risk but with associated trade-offs and risks. Strategies to manage both price and currency risk will be evaluated. Topics include the market price mechanism, commercial trade markets, characteristics of forward markets, identifying market position and calculating exposure through position valuation, risk transfer mechanisms, establishing risk management objectives, problems with forward contracts under high risk, futures hedging, basis risk, hedging using options, over-the-counter bank pricing products, currency risk management, developing tactics in decision-making, financing commodity inventory and managing commodity and financial risks within the organization.
Incompatibles:	FIN3DER
Work Experience Indicator:	Student is not undertaking work experience in industry
Available to 'Study Abroad' students:	Y

Assessment:

Assessment Type	%	Comments
One written in-class test - approx. 500 words	10
One written report (trading account exercise) - approx. 500 words	10
One written report (hedging exercise) - approx. 1500 words	20
One written 2-hour examination	60

Readings:

Reading Type	Title	Author	Publisher
Prescribed	Prescribed text: Agricultural Price Risk Management - The Principles of Commodity Trading	Williams, John and Bill Schroder, 1999	Oxford University Press, Melbourne.
Prescribed	Prescribed pre-reading: Chapters 1, 2, 3, 5, 7 & 10 of: Competition and Efficiency in International Food Supply Chains – Improving Food Security	Williams, John, 2012	Earthscan-Routledge, UK.

Subject Coordinator: Dr John Williams

Class Requirement
BUNDOORA
	Week 09-15, Day. Dr John Williams (John.Williams@latrobe.edu.au)
		One 3-hour Tutorial per study period and delivered via face-to-face. (Revision tutorial during the semester)
		One 5-day Lecture per study period and delivered via face-to-face. (26 Hours of blockmode lectures)
		Nine 1-hour Tutorials per study period and delivered via face-to-face. (9 hours of blockmode tutorials)