Market-Based Approaches to Managing Commodity Price Risk
No hay miniatura disponible
Fecha
Autores
Título de la revista
ISSN de la revista
Título del volumen
Editor
Washington, DC
Resumen
Descripción
Contribution to the G20 Commodity Markets Sub Working Group
Though well-established in the commercial sector, the use of market-based price risk management is not widespread in the public sector, particularly by sovereigns. Recent volatility in energy and food prices, however, has awakened the interest of some governments to learn more about how they can either use these tools, or foster supportive environment where these tools can be used by local supply chain actors. Equally important is ensuring that non-price related risks are isolated, monitored, and managed independent of direct price exposure. This note reviews lessons learned from recent efforts to advance risk management strategies in countries vulnerable to food and energy price shocks. It focuses specifically on the use of market-based risk management approaches and use by sovereigns. For governments concerned about the risk of food price shocks, the fiscal impact is equally complicated as governments may be concerned about the impact of rising food prices on consumers, the need to finance, and potentially supply, subsidies or social safety nets for vulnerable populations or, in extreme cases, humanitarian operations. In both cases, the costs of budget uncertainty and the need to finance responses in the event of a shock can be significant. Finally, though not typically used to manage specific intra-annual or intra-seasonal price exposures, commodity-linked loans or bonds can also be used to manage exposure to price shocks on a more macro level.
Though well-established in the commercial sector, the use of market-based price risk management is not widespread in the public sector, particularly by sovereigns. Recent volatility in energy and food prices, however, has awakened the interest of some governments to learn more about how they can either use these tools, or foster supportive environment where these tools can be used by local supply chain actors. Equally important is ensuring that non-price related risks are isolated, monitored, and managed independent of direct price exposure. This note reviews lessons learned from recent efforts to advance risk management strategies in countries vulnerable to food and energy price shocks. It focuses specifically on the use of market-based risk management approaches and use by sovereigns. For governments concerned about the risk of food price shocks, the fiscal impact is equally complicated as governments may be concerned about the impact of rising food prices on consumers, the need to finance, and potentially supply, subsidies or social safety nets for vulnerable populations or, in extreme cases, humanitarian operations. In both cases, the costs of budget uncertainty and the need to finance responses in the event of a shock can be significant. Finally, though not typically used to manage specific intra-annual or intra-seasonal price exposures, commodity-linked loans or bonds can also be used to manage exposure to price shocks on a more macro level.
Palabras clave
ACCOUNTING, AVERAGE PRICE, BASIS RISK, BONDS, CALL OPTION, CALL OPTIONS, COMMODITIES, COMMODITY, COMMODITY EXCHANGE, COMMODITY EXCHANGES, COMMODITY MARKETS, COMMODITY PRICE, COMMODITY PRICES, COMMODITY RISK MANAGEMENT, CONTINGENT LIABILITIES, COUNTRY TO COUNTRY, CURRENCY, CURRENCY RISK, DERIVATIVES, DEVELOPING COUNTRIES, ENABLING ENVIRONMENT, ENERGY PRICE, ENERGY PRICES, EXPORTER, EXPOSURE, EXPOSURES, FINANCIAL CRISES, FINANCIAL EXPOSURE, FINANCIAL INNOVATION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENT, FINANCIAL INSTRUMENTS, FINANCIAL PRODUCT, FINANCIAL RISK, FOOD COMMODITIES, FOOD PRICE, FOOD PRICES, FORWARD CONTRACTS, FUTURES, FUTURES MARKETS, GOVERNMENT BUDGET, GOVERNMENT REVENUES, HEDGES, HEDGING, INCOME, INFORMATION SYSTEMS, INSURANCE, INTEREST RATE, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL MARKET, INVESTMENT BANK, LEGAL FRAMEWORK, LIQUIDITY, LOAN, LOW-INCOME COUNTRIES, MARKET PRICE, MARKET PRICES, MARKET VOLATILITY, OIL PRICE, OIL PRICES, OPTION CONTRACT, OPTION CONTRACTS, POLITICAL RISK, PRICE FLOOR, PRICE INCREASES, PRICE LEVEL, PRICE MOVEMENTS, PRICE PROTECTION, PRICE RISK, PRICE RISK MANAGEMENT, PRICE STABILIZATION, PRICE VOLATILITY, PRINCIPAL REPAYMENT, PUBLIC DEBT, PUBLIC DEBT MANAGEMENT, PUBLICITY, PUT OPTION, PUT OPTIONS, RISK MANAGEMENT, RISK MANAGEMENT STRATEGIES, RISK MANAGEMENT TOOL, SALES, SETTLEMENT, SETTLEMENT ARRANGEMENTS, SOCIAL SAFETY NETS, SUPPLIERS, SUPPLY CHAIN, SUPPLY CHAINS, SUPPLY CONTRACTS, SUPPLY SHOCKS, SURPLUS, SWAPS, TRADE FINANCE, TRADED COMMODITY, TRADING, VOLATILITY