Create a Hedge Position and Allocation via the Commodity Exposure Report

This activity creates a hedge position for a physical commodity and allocates the despatch order (DO) or quota to the hedge position.

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 Commodity Exposure.
  2. Search for exposure for a company across a date range. See View Commodity Exposure.
  3. Perform one of the following steps:
    1. To create a futures contract or an options contract, right-click the exposure for a DO, quota or repurchase action and select Hedge » Hedge Action from the menu.
    2. To create a spread contract or a swaps contract, right-click the exposure for a DO or quota and select Hedge » Related Actions from the menu.

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

  4. 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 inherited from the default types specified for the market commodity.
    The Owner Organisation and District are inherited from the DO, quota or repurchase action 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 DO, quota or repurchase action. Keeping this default means that the DO, quota or repurchase action is overhedged.

  5. 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, quotas or repurchase actions can be allocated to the hedge position if there is sufficient unallocated quantity in the hedge position.

    Note: The hedge position must be locked to affect the exposure displayed in the Commodity Exposure report. See Lock Hedge Positions.