Agricultural Commodities

Agricultural product risk management, valuation and optimisation

  1. Diverse physical assetsand financial contracts 
  2. Complex derivative contracts such as crush spreads
  3. Complex seasonality in agricultural prices

... present great challenges to the risk analysis and valuation of agricultural commodity contracts and assets.

Be confident that you are working with specialists that understand your agricultural commodity challenges. 

Agricultural products like grains, oilseeds, biofuels, and fertilizers go through cycles of supressed and hyper volatility in both price and supply. Combined with limited price liquidity, quality and location spreads, complex contract terms and perishability, it can be a real challenge to capture and assess portfolio risks.   Market players with agricultural commodity exposures either as a producer, processor or consumer (eg food & beverage operators) need to adhere to sound risk management principles to stabilise their cashflows and optimise profitability. 

These players require tools that can capture both the financial and physical movements of agricultural trading, processing and purchasing.  Lacima understands the specific requirements of companies exposed to numerous agricultural commodity risks and works with them to ensure they can optimise their portfolio while maximising profits.

Our award winning software and consulting services draw on the models and methodologies developed by Lacima’s founders through their acclaimed research and published works. 

Our solutions help you to value and risk manage complex agricultural portfolios that can include warehousing and transportation contracts while accommodating complex pricing features of agricultural commodities such as crush spreads and index based deals.

We can help you with the agricultural commodity management and valuation challenges you face:

  • Assess the relevant risk metrics for agricultural players, trading or logistics operators with physical production, consumption or processing facilities as well as complex agricultural contracts
  • Analyse hedging strategies to best manage your agricultural exposure 
  • Understand the most relevant models to capture the unique characteristics of agricultural commodity prices
  • Assess valuation frameworks that accurately value long-term agricultural contracts for offtake, crushing, warehousing and transportation so that you don’t leave profit on the table
  • Capture all the parameters of complex derivative contracts such as fixation options, crush spreads and locational spreads
  • Value and optimise the crushing and processing operation
  • Value and optimise the warehousing and silo storage of agricultural commodities
  • Value and optimise the flexibility of transporting agricultural commodities via truck, rail, vessel or barges
  • Analyse large books of agricultural commodities derivative deals
  • Scenario analysis such as “what-if” deals, stress testing on prices or volumes, Monte Carlo simulation, and other advanced risk management techniques
  • Understand your VaR drivers and changes with VaR attribution
  • Report company-wide risks across your assets and drill down to individual regions, products, trading desks, traders and deals to fully understand your risks and sources of value

 

Power Industry Reference Resources
Software
Training