Create a Hedge Position and Allocation for a Despatch Order

This activity creates a hedge position for a physical commodity and allocates the despatch order to the hedge position.

Hedging is only possible if the despatch order:

  • Is not a child despatch order
  • Does not have Ignore for Hedging checked
  • Does not belong to a quota that has Hedging Required checked
  • Has a selectable status (if the Despatch Order status definition exists)

Quota-based hedging is normally only used for contracts with product pricing, not analyte pricing.

Security Note: You need the Allow the user to maintain hedge actions security right in the Accounting user group security rights group for this activity.

Activity Steps

  1. Open the Despatch Order.
  2. Select the Hedge tab.
  3. Select the Analyte for which to filter displayed hedging allocations and available market commodities. Select from All and any analytes that are specified in both the hedging commodities and the contract product specification.
  4. Perform one of the following steps:
    1. To create a futures contract or an options contract, right-click in the Hedging Allocation field group and select Hedge » Hedge Action from the menu.
    2. To create a spread contract or a swaps contract, right-click in the Hedging Allocation field group and select Hedge » Related Actions from the menu.

      The menu displays applicable market commodities, each with its associated market.

  5. Select the market commodity for which to create the hedge position.

    The New Hedge Action screen displays.

    Note: The Contract Type, Option Type (if applicable) and Transaction Type are as specified for the market commodity.
    The Owner Organisation and District are inherited from the despatch order and its contract.
    The Number Of Contracts defaults to a value that is sufficient for the Quantity of the hedge position to be greater than the Allocated Quantity from the despatch order or quota. Keeping this default means that the despatch order or quota is overhedged.

  6. As applicable for the hedge position's contract type, see the following activities for further steps:

    Note: Some steps can only be completed on the Hedge Actions tab of the Hedging Explorer after searching for the hedge position. Additional despatch orders or quotas can be allocated to the hedge position if there is sufficient unallocated quantity in the hedge position.

  7. To invert the sign on the Allocated Quantity, check Invert Allocation for the commodity in the Hedging Allocation table. Default: Unchecked.

    MineMarket updates the Allocated Quantity and Remaining Quantity.

  8. Click Save.