COMMODITY RISK MANAGEMENT
Credit points: 15
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.
FacultyFaculty of Science, Tech & Engineering
Subject Co-ordinatorJohn Williams
Available to Study Abroad StudentsYes
Subject year levelYear Level 3 - UG
Incompatible subjects FIN3DER
|Resource Type||Title||Resource Requirement||Author and Year||Publisher|
|Readings||Prescribed pre-reading: Chapters 1, 2, 3, 5, 7 & 10 of: Competition and Efficiency in International Food Supply Chains - Improving Food Security||Prescribed||Williams, John, 2012||EARTHSCAN-ROUTLEDGE, UK.|
|Readings||Prescribed text: Agricultural Price Risk Management - The Principles of Commodity Trading||Prescribed||Williams, John and Bill Schroder, 1999||OXFORD UNIVERSITY PRESS, MELBOURNE.|
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Melbourne, 2014, Week 09-15, Day
Maximum enrolment sizeN/A
Subject Instance Co-ordinatorJohn Williams
One 5.0 days lecture per study period and delivered via face-to-face.
"26 Hours of blockmode lectures"
Nine 1.0 hours tutorial per study period and delivered via face-to-face.
"9 hours of blockmode tutorials"
One 3.0 hours tutorial per study period and delivered via face-to-face.
"Revision tutorial during the semester"
|One written 2-hour examination||60|
|One written in-class test - approx. 500 words||10|
|One written report (hedging exercise) - approx. 1500 words||20|
|One written report (trading account exercise) - approx. 500 words||10|