The commodity trade industry has many different aspects ranging from physical commodities, commodity trading, speculative trading, commodity logistics, finance and risk management. Through this Commodity Knowledge Center we aim to help you understand this unique industry and all of its different facets and how this relates to commodity trade and risk management solutions (CTRM).
Unique about commodities compared to other products is the constant price movement which puts a challenge to the administration of its business process. These constant price movements (also known as price volatility) also introduces the need for a derivative component in this industry. Without derivatives the volatility would be increased and instruments such as commodity futures and options would smoothen the price bumps. The existence of both a physical and derivative market introduces the need for specific system needs to accommodate administration of a commodity trade or purchase operation. A CTRM system such as Agiblocks accommodates these specific needs. Each commodity has its own specialized properties to consider in a CTRM system. For this reason commodity knowledge is essential to comodity trade, but also to succesfully implement a CTRM solution.
The Commodity Trade and Risk Management can be seen from three different views: Trading, Market and Risks.
Physical commodities require specific knowledge and sophisticated solutions in order to manage the supply chain and secure and improve the overall quality of trading activities:
Commodities can be divided into three different groups: Agricultural, Metals and Energy.