The London School of Commodity Price Risk Management

5 days 21-25 Nov 2016, London UK £4,895.00 + VAT* Download brochure Add to basket

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Course 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 and 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 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.

London Metal Exchange site visit:
To reinforce the learning in the practical context, participants will have the opportunity to witness open outcry trading during a site visit to the LME during the course.

Delegates are advised that the LME operates a smart casual dress code.

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

Who should attend

The course has been designed to be accessible to those with no prior exposure to commodity markets, and to develop and enhance the knowledge of those already working with commodities.
It would benefit:

  • Commodities players
  • Physical market players
  • Credit and equity analysts in the commodity sector
  • Financiers
  • Investors
  • Traders
  • Treasury Managers
  • CFOs and Finance managers
  • Regulators and auditors

A basic knowledge of capital markets, financial mathematics and derivatives is assumed


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.

School of Commodity Price Risk Management Instructor- Emma Jenkins

Course Instructor

The Course Instructor has many years’ experience working in commodity markets, specialising in derivative pricing and structuring, and loan origination.  She is currently a director of a consulting business specialising in commodity price risk advisory 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. The Course Instructor commenced her banking career in the Goldman Sachs graduate program.  At Westpac Banking Corporation 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. The Course Instructor holds a BSc Hons, a gold medal and Foundation Scholarship in Mathematics from Trinity College, Dublin.



Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Related Courses


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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

The Interaction between Physical and Paper Markets

  • Market inter-relationships
  • Physical and paper contracts
  • Delivery and storage
  • Managing physical risk with paper
  • Features of suitable paper products

Workshop: Implementing a price risk management strategy in tandem with a physical procurement program

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: Devising commodity trading strategies and managing a derivative portfolio in response to market movements

Commodity Types

Precious Metals

  • Good delivery
  • Allocated and unallocated metal
  • Price benchmarks and lease rates
  • 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

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
  • Exchange for physical

Workshop: Pricing differentials between high and low sulphur fuel oils in Singapore and Europe

Completing the Energy Spectrum

  • Natural gas

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

  • Coal

             - Coal classifications
             - Financial markets for coal
             - Principal indices

  • Electricity

            - Load
            - Marginal fuel
            - Spark and dark spreads


Carbon Markets

  • Carbon trading
  • Kyoto, Copenhagen and beyond
  • Carbon credits
  • Clean development mechanism
  • Joint implementation
  • Emission trading systems
  • The EU ETS

             - EUAs and CERs

Agricultural and Soft Commodities

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

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

  •  Softs

                - Sugar, cocoa, coffee and cotton

Case Study: Identifying hedgeable commodity price risks in an agri-business

Freight Markets

  • Wet and dry freight
  • Vessels and shipping routes
  • The Baltic Exchange
  • Worldscale and TCE
  • Freight futures and FFAs

Bulk Commodities

  • Physical pricing conventions
  • Steel

             - Long and flat products
             - Steel derivatives

  • Iron ore market development

Site Visit to the London Metal Exchange: A site visit to the London Metal Exchange (the “LME”), the world’s premier non-ferrous metals market, gives participants the opportunity to witness contracts being traded through open-outcry trading.  Participants observe the setting of official settlement prices, which are relied upon by industry throughout the world.  The visit gives participants the practical context to complement and reinforce lecture sessions. 



Managing Commodity Exposure

Principles of Commodity Price Management

  • Price risk challenges
  • Underpinning business strategy
  • Physical contracts and natural hedges
  • Designing the hedge
  • Product choice
  • Protection and commitments
  • Accounting implications
  • Structured products

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

Focus Session: What is a “swap” in precious metals markets?

  • Lease rate swaps and floating forwards
  • Borrowing and lending on the swap
  • Cash and physical implications of a floating forward

Workshop: Using futures and swaps to hedge price risks in physical contracts

Workshop: Unpicking an energy consumer’s hedging strategy

Assessing Commodity Risk

  • Market risks
  • Assessing basis risk
  • Rollover risks
  • Model risk
  • Stress testing
  • Operational issues


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

Workshop: Determining the optimal issuance environment for a commodity linked note

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

Case Study: Evaluating loan and hedging alternatives for a mining project

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

Focus Session: Learning from others’ mistakes

This final session describes some of the major commodity hedging disasters and why they went wrong.  The session emphasises how the practical techniques learnt during the course can be applied to avoid similar issues. 

Concluding summary and questions

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