This September (2016) Agiboo has released extensive support for Cross market pricing, in the sugar industry also referred as White Premium Price rolling. Agiblocks CTRM now supports a user to (partially) price a contract across 2 futures markets trading in the same currency. This is common for pricing or to “lock in“ in the “White Premium“ in the Sugar trade, but could also be used in other contracts where counter parties agree (partially) price or to lock in the arbitrage between two markets, or when companies to choose to (partially) hedge based on arbitrage between markets.
It is for Agiboo another commitment to support important functionality for the sugar industry. Sugar is in trade rather unique with two main futures instruments where one can be converted into the other by adding production effort to it. This given fact creates opportunity and possibilities in trade as it allows pricing and hedging. One could see the white premium as the refining cost to convert raw sugar into white sugar.
Agiblocks provides throughout the entire solution the administration, calculation, allocation and valuation features to support the white premium trade mechanisms. The example below shows an impression of a White Premium configuration between Sugar #5 and NY Sugar #11.
Where a cross market pricing is composed from two future instruments, for cross market pricing, both future instruments and the positive /negative value will be shown in the hedge allocation dialogues. The new match functionality will help a trader to easily find its related futures based on criteria such as delivery and futures month. an impression on how such is visible in Agiblocks:
These are just two impressions on how Agiboo moves complex structures into an easy action screen. Agiboo will continue its support to the sugar industry with specific features and functions. When you like to learn more about Agiblocks white premium functionality or about Agiblocks CTRM in general, let us know.