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pj


Total Posts: 3654
Joined: Jun 2004
 
Posted: 2022-03-09 16:03
It is quite actual, but let's pretend we are at the simpler times.
How to construct and hedge a commodity portfolio?
Any basic basic stuff?
Mostly I would be interested in books.
Preferably at the most basic level.

The older I grow, the more I distrust the familiar doctrine that age brings wisdom Henry L. Mencken

nikol


Total Posts: 1466
Joined: Jun 2005
 
Posted: 2022-03-09 17:19
Apart from books I am using this algo:
Choose one commodity, Find its price feed
Understand logistics (INCOTERMS, except electricy) and what are delivery points
Understand price of transport, storage and what effect it can have (in apr2020 there was negative oil futures price!)
Trade Financing and insurance
Demand. Important to understand where commodity is used and respective market sizes.
Supply. Location of Resources. Generation. Geopolitics is now very important. Understand modes of transport.
For electricity generation understand (marginal) cost curve. this concept can be used across many other commodities. It is like LimitOrderBook.
Useful to get an idea about dynamic network flow algos (to predict logistic network bottlenecks)

Make few estimations. Refer to books. Make it practical.

Not well structured, just a list, sorry.

... What is a man
If his chief good and market of his time
Be but to sleep and feed? (c)

CMPT


Total Posts: 50
Joined: May 2006
 
Posted: 2022-04-30 18:39
This book by commodity PMs at pimco helped me:


Intelligent Commodity Indexing: A Practical Guide to Investing in Commodities

pj


Total Posts: 3654
Joined: Jun 2004
 
Posted: 2022-05-01 14:31
Thank you very much!
It's very timely.

The older I grow, the more I distrust the familiar doctrine that age brings wisdom Henry L. Mencken
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