Commodity Price Risk Management

3 days 5-7 Sep 2018, Singapore Singapore $4,995.00 Download brochure Add to basket

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Overview

Effective commodity price risk management is becoming a critical differentiator of business performance for any company producing, trading, consuming or using commodities as part of their manufacturing or distribution process. Price volatility and increasingly complex commodity markets are the main influencing factors. Companies that proactively and efficiently manage their commodity price risk will gain a competitive advantage over their peers especially when it comes to profit margin. Bankers, trade financiers and investors alike can also benefit from the vast risk appetite opportunities in commodities.

This practical 3-day training course has been designed to provide delegates with a comprehensive overview of the commodities markets, hedging strategies and risk management techniques to effectively manage commodity exposure.

The first part of the programme is an introduction to the main commodity asset classes, their market structures and the main players in the commodity markets. It also introduces the concepts of derivatives instruments used in commodity trading. The second part of the programme focuses on how to manage commodity price exposure through hedging techniques using exchange traded and OTC derivatives. Drawing upon numerous examples, and through the use of industry-specific case studies and workshops, participants will learn several techniques for dealing with the scope and complexity of commodities trading and risk management. The course also explores the investment vehicles available for accessing commodity exposure and the financing options in the commodities sector, including: Royalties and streaming; project finance; corporate facilities; trade and export finance.

Practical Learning

The training will comprise a combination of classroom-based teaching combined with real-life case studies and workshops to gain practical exposure to key principles and concepts.

Attend this comprehensive course and gain an in-depth overview of:

  • The mechanics of the main commodity markets including: precious metals; base metals; energy; bulk commodities; agricultural and softs
  • Hedging techniques for the different commodities sectors
  • Techniques to manage commodities risk exposure
  • Commodities exchange-traded and OTC derivatives and their applications in risk management
  • Methods for de-risking commodities financing activities specific to project finance, trade finance and reserve base lending
  • Selecting investment strategies appropriate to market conditions

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

Singapore
Emma Jenkins

The course director has many years’ experience covering commodity markets, derivative pricing and structuring, and loan origination.

After graduating from Trinity College, Dublin, with a BSc Hons, a gold medal and Foundation Scholarship in Mathematics, she commenced her banking career in the Goldman Sachs graduate program.  After this, she joined Westpac Banking Corporation where she was responsible for the design and implementation of derivative pricing models for the interest rate and FX trading desks.  She moved into the commodity arena when she joined Credit Suisse to market complex hedge structures in precious metals and associated financings. She later joined Macquarie Bank as a specialist commodity director, where she provided a complete banking service to clients in the base and precious metals, and oil and gas sectors.  She is currently a director of a consulting business which specialises in commodity price risk management and related expert witness work.

Her clients range from central banks and regulators, large miners, traders and manufacturers, wealth managers, through to small import/export businesses, thereby giving her a unique insight into the issues facing the many market participants.

Venue

Singapore

4-5 Star Hotel in Singapore

All of our courses are held in 4 – 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.

Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. Course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.

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We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

Agenda

Day 1

Core Commodity Concepts

Introduction to Commodities

  •  Definition and classifications
  •  Principal price drivers
  • Commodity cycles and recent performance
  • Spot and forward prices
  • Contango, backwardation and convenience yield


Financial Markets for Commodities

  • Futures contracts
  • The main commodity exchanges
  • Size of futures markets
  • Physical and cash settled futures
  • Size of OTC markets
  • Common OTC products
  • Centrally cleared OTCs

Workshop: Exploring the differences between using futures and swaps to hedge price risks

Commodity Types

Precious Metals

  • Good delivery
  • Allocated and unallocated metal
  • Price benchmarks, lease rates and GOFO
  • Metal forward prices
  • Precious metals futures
  • Industry bodies
  • The unique nature of gold
  • Central banks, producers and investors
  • Silver and PGMs

Base Metals

  • The London Metal Exchange and the physical market
  • LME brands
  • Warrants and seller’s option
  • Warehousing and stocks
  • Trading on the LME
  • LME contract dates
  • Price benchmarks
  • Other base metals exchanges

Workshop: Comparing London and Shanghai copper prices

Day 2

Energy Markets

  • Classifications of crude oil
  • Global crude benchmarks
  • Crude price differentials

               - Focus on Brent vs WTI

  • Distillates

               - Gasoline, kerosene, diesel, gasoil, VGO, fuel oil & bunkers

  • Trading oil and distillate products
  • Physical assessments
  • Principal energy futures
  • Natural gas

                - LNG and shale gas
                - European and US gas markets
                - Oil indexation

Focus Session: Using Exchange for Physicals

Agricultural and Soft Commodities

  • Farming basics
  • The impact of climate effects
  • Market size
  • Grains

               - Corn and wheat
               - The soy complex and the crush
               - Seasonality and forward prices

  • Softs

               - Sugar, cocoa, coffee and cotton

Case Study: Dealing with basis risk in grains

Bulk Commodities

  • Physical pricing conventions
  • Coal

               - Coal classifications
               - Financial markets for coal

  • Steel

               -  Long and flat products
               - Steel derivatives

  • Iron ore market development

 

Day 3

Managing Commodity Exposure

Using Commodity Derivatives

  • Fixed for floating swaps explained
  • Using forward structures
  • Comparing forwards, loans and prepays
  • Trading spreads: cracks, diffs and the crush
  • Options and swaptions strategies
  • Swing contracts
  • Typical strategies for:

               - Producers
               - Consumers
               - Physical traders
               - Processors

Workshop: Unpicking an energy consumer’s hedging strategy

Taking a Discretionary Exposure

  • Why invest in commodities?
  • Commodity indices

              - Traditional indices
              - Enhanced indices
              - Optimising roll yield

  • Exchange Traded Products

              - ETCs, ETFs, ETNs
              - Physically backed products

  • Commodity linked notes

Financing Structures

Financing Producers

  • Reserves and resources
  • Early stage funding
  • Royalties and streaming explained
  • Reserve based and corporate lending
  • Common hedging strategies
  • Fine-tuning the hedge
  • Prepays revisited

Export and Trade Finance

  • Commodity route to market
  • Where should the financier sit?
  • Protecting the value of the collateral
  • Tripartite agreements

Workshop: Combining a hedge with trade finance
Discussion session: Lessons learned from others’ mistakes


 

Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product