Commodity Derivatives

Euromoney Learning Solutions

How long?

  • from 3 days
  • in person, online

Euromoney Learning Solutions


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Who should attend

The course has been designed to be accessible to those with no prior exposure to commodity derivatives, 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.

About the course

Managing price risk and exposure in commodities markets

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 over-the-counter (“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 how trade and export financiers can mitigate against price movements of cargoes.

Practical learning:

The training has been optimised for virtual delivery, using technology to enhance traditional classroom teaching techniques to deliver a genuinely interactive learning and networking experience irrespective of where a delegate is located. Each session is a combination of interactive lectures, group workshops and real-life case studies to ensure key principles and concepts are understood and can be applied in practice.

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
  • Exchange-traded and OTC commodity derivatives and their applications in risk management
  • Methods for de-risking commodities financing activities specific to export and trade finance
  • Selecting investment strategies appropriate to market conditions



Core Commodity Concepts

Introduction to Commodities

  • Definition and classifications
  • Principal price drivers
  • Spot and forward prices
  • Contango, backwardation and convenience yield

Financial Markets for Commodities

  • Cash and physically settled forwards
  • Exchanged traded futures and options
  • The main commodity exchanges
  • Size of futures markets
  • 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 and lease rates
  • Metal forward prices
  • Precious metals futures
  • Industry bodies

Workshop: Settling transaction with allocated and unallocated metal

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


Crude Oil and Distillates

  • Classifications of crude oil
  • Global crude benchmarks
  • Crude price differentials
  • Distillates: gasoline, kerosene, diesel, gasoil, VGO, fuel oil & bunkers
  • Trading oil and distillate products
  • Physical assessments

Focus Session: Using Exchange for Physicals

Natural Gas

  • Shale gas and LNG
  • European and US gas markets
  • Oil indexation

Agricultural and Soft Commodities

  • Differences to mineral and petroleum resources
  • 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

Managing Commodity Exposure

Using Commodity Derivatives

  • Fixed for floating swaps explained
  • Using forward structures
  • Trading spreads: cracks, diffs and the crush
  • Options and swaptions
  • Typical strategies for:
    • Producers
    • Consumers
    • Physical traders
    • Processors

Workshop: Participants devise a hedging strategy for an energy consumer


Taking a Discretionary Exposure

  • Why invest in commodities?
  • Commodity indices
  • Exchange Traded Products
  • Commodity linked notes

Financing Commodities

Export and Trade Finance

  • Commodity route to market
  • Protecting the value of the collateral
  • Margin call financing
  • Tripartite agreements

Workshop: Combining a hedge with trade finance

Concluding summary and questions


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 Gol...

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Commodity Derivatives at Euromoney Learning Solutions

From  GBP 2 695$2,695
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