Author Archives: Claudia Soria
Criollo Cocoa Bean
The Criollo cocoa bean is native to Central America. It is grown in Mexico, Nicaragua, Venezuela, Colombia and in some islands in the Indian Ocean. It constitutes only about 1-5% of the total cocoa world production. It is considered the … Continue reading
Cocoa
Cocoa is a highly prized commodity. Cocoa derived products include cocoa powder, cocoa butter, and cocoa liquors. Cocoa is largely used in the production of chocolate, but other ingredients like cocoa butter can be used in the manufacture of soap … Continue reading
Effective Price
The effective price is the price at which a commodity is sold or bought after the hedge has been lifted (liquidated). It can be calculated either by adding/substracting the basis change to the original cash price, or by adding/substracting the … Continue reading
Short the Basis
A hedger is said to be short the basis when he/she has a short cash position hedged with a long futures position. Long hedgers want to protect the price of a later cash commodity purchase or a short actuals position … Continue reading
Short Cash Position
A short cash position implies the hedger will receive cash now, owing the delivery of the commodity at a later date. The hedger will need to purchase the commodity before it can be delivered.
Dry Metric Tonne Unit
A Dry Metric Tonne (Ton) Unit (dmtu) is the internationally agreed-upon unit of measure for iron ore pricing. It has the same mass value as a metric tonne, but the material has been dried to decrease the moisture level. A … Continue reading
Long Tonne
A long tonne or ton is a unit of mass used in the United Kingdom as part of the Imperial System . long tonne (ton) = 2,240 lb (1,016.047 kg)
Short Tonne
A short tonne or ton is a unit of mass used in North America. short tonne (ton) = 2,000 lb (907.1847 kg)
Long the Basis
Being long the basis means to have a long actuals position (you own the commodity or you will own it in the future), hedged with a short futures position. Short hedgers want the basis to remain the same or to … Continue reading
Trade Margins
Trade margins or lower hedge margins are available only to commodity hedgers and not to speculators. Hedgers face lower risks than speculators because they have opposite positions in cash and futures. Price movement opposite to the held position benefits the … Continue reading