Create a Physical Commodity Hedging Allocation

You can allocate despatch orders, quotas and repurchase actions to hedge positions for physical commodities.

The allocation can be to locked or unlocked hedge positions, but not to withdrawn options contracts.

Child despatch orders cannot be allocated to a hedge position.

If the Despatch Order status definition exists, only despatch orders with a selectable status can be allocated.

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 Hedging Explorer.
2. Select the Hedge Actions tab.
3. Find the hedge position. See Find Hedge Positions.
4. Select the hedge position in the Hedge Actions table. For spread or swaps contracts, select either leg.
5. Right-click in the Hedging Allocations table and select Add from the menu.

   The Despatch Orders / Quotas Search (Hedging) screen displays.

6. Enter the following search criteria as required.
   • Start Date—Date from which to search for despatch orders or quotas that have any part of their quotation period (QP) for the commodity within the search date range. Default: The first day of the month of the QP of the hedge position.
   • End Date—Default: The last day of the month of the QP of the hedge position.
   • Organisations—Select from the organisations and companies defined on the Organisations panel of the Solution Explorer and that have the Organisation Role of Customers.
   • Companies—Select from the companies defined on the Organisations panel of the Solution Explorer. Default: The company of the district of the hedge position.
   • Products—Select from the products and brands defined on the Material panel of the Solution Explorer.
   • Unallocated Quantity Method—Select from Not Fully Hedged, Overhedged and All.
   • Contract Type—Contract type to match when searching for despatch orders or quotas. Select from Sales Contract and Purchase Contract. Default: (blank)—All contract types.
7. Select whether to search for Despatch Orders, Quotas or Repurchase Actions. Repurchase actions only display for futures and options contracts.
8. To include a text string in the search criteria:
   1. Select the method to Search By from Despatch Order, Quota and Contract. Searching by Despatch Order will also return repurchase actions.
   2. Enter the Search Text. Text searches are case-sensitive with SQL databases with a case-sensitive collation and with all Oracle databases
9. Click Search or press F3.

   In the Despatch Orders / Quotas table, the Despatch Date for despatch orders is the bill of lading date, or the planned despatch date if there is no bill of lading date; and for quotas, the start date of the quota.

10. Check Selected next to the despatch orders, quotas or repurchase actions that are to be allocated to the hedge position.
11. Click Add.
12. Update the Allocated Quantity for each despatch order, quota or repurchase action if required. Default: The unhedged quantity of the despatch order, quota or repurchase action, or the remaining quantity in the hedge position, whichever is the lower.

    By default, the sign of the Allocated Quantity matches the sign of the Quantity of the hedge position. That is:

    • Positive for futures contracts and the legs of spread or swaps contracts with a Transaction Type of Buy
    • Negative for futures contracts and the legs of spread or swaps contracts with a Transaction Type of Sell
    • Positive for bought call options and sold put options
    • Negative for sold call options and bought put options

    Only positive quantities can be entered: MineMarket converts the quantity to a negative value as required.

    MineMarket updates the Remaining Quantity for the despatch order, quota or repurchase action. A despatch order, quota or repurchase action may already be partially allocated to other hedge positions. The remaining quantity is the amount not already allocated to any hedge positions. A despatch order can be overhedged; that is, Remaining Quantity can be a negative amount.

    MineMarket updates the Total Allocated Quantity and Difference for the hedge position.

    In the Hedging Allocations table, the Bill Of Lading Date for despatch orders is the bill of lading date, or the planned despatch date if there is no bill of lading date; and for quotas, the start date of the quota.

13. To invert the sign on the Allocated Quantity, check Invert Allocation. Default: Unchecked.

    MineMarket updates the Remaining Quantity, Total Allocated Quantity and Difference.

14. Click Save.