IDEAS home Printed from https://ideas.repec.org/h/gdk/chapte/3.html
   My bibliography  Save this book chapter

Hedging strategies of derivatives instruments for commodity trading entities

In: ENTERPRISES IN UNSTABLE ECONOMY

Author

Listed:
  • Piotr Giruæ

    () (Faculty of Management and Economics, Gdansk University of Technology)

Abstract

Agricultural derivatives play an active role in price determination and transparency in the local agricultural market whilst providing an efficient price risk management facility. Producers and users of agricultural commodities hedge their price risk, thereby limiting their exposure to adverse price movements. This encourages increased productivity in the agricultural sector as farmers and users are able to concentrate their efforts on managing production risks. These are the risks associated with variables such as the weather, farm/production management and seasonal conditions. The futures market exists mainly for the purpose of allowing commercial users to hedge their transactions or lock in favourable prices. The market could not operate efficiently and effectively without speculators, who provide the necessary market liquidity. It allows commercial users to hedge. Speculators use futures and options in an attempt to make profits on short-term price movements. The aim of this article is to determine price risk value on wheat market and find hedging for commodity producers.

Suggested Citation

  • Piotr Giruæ, 2015. "Hedging strategies of derivatives instruments for commodity trading entities," GUT FME Conference Publications,in: Blazej Prusak (ed.), ENTERPRISES IN UNSTABLE ECONOMY, chapter 2, pages 19-34 Faculty of Management and Economics, Gdansk University of Technology.
  • Handle: RePEc:gdk:chapte:3
    as

    Download full text from publisher

    File URL: ftp://ftp.zie.pg.gda.pl/RePEc/gdk/chapte/ENTIME2015_CH_2.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wilson, William W. & Wagner, Robert & Nganje, William E., 2003. "Strategic Hedging For Grain Processors," Agribusiness & Applied Economics Report 23637, North Dakota State University, Department of Agribusiness and Applied Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Price risk management; agricultural future contracts; commodity marketS;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gdk:chapte:3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wojciech Drapinski). General contact details of provider: http://edirc.repec.org/data/wzepgpl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.