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Risk Management

Welcome to the BPEX Price Risk Management web area. Volatile grain prices have huge impacts on feed costs, so management of this volatility is key to business success. This web area aims to provide pig producers with an introduction to managing raw material costs using futures and options.

The graphs on this page ilustrate the current performance of these products in certain scenarios, but please explore the rest of this area to get a fuller insight.

For more information, please contact [email protected]

‘Using futures to fix forward wheat price for Nov-11’

Chart.

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Date	Price fixed via futures	Price	Initial Margin	Margin call	Total cash flow
22 Jul 2011	160.00	161.00	-12.40	1.00	-11.40
21 Jul 2011	160.00	163.00	-12.40	3.00	-9.40
20 Jul 2011	160.00	165.65	-12.40	5.65	-6.74
19 Jul 2011	160.00	165.90	-12.40	5.90	-6.49
18 Jul 2011	160.00	162.00	-12.40	2.00	-10.40
15 Jul 2011	160.00	165.00	-12.40	5.00	-7.40
14 Jul 2011	160.00	166.15	-12.40	6.15	-6.24
13 Jul 2011	160.00	167.15	-12.40	7.15	-5.24
12 Jul 2011	160.00	161.50	-12.40	1.50	-10.90
11 Jul 2011	160.00	162.50	-12.40	2.50	-9.90
8 Jul 2011	160.00	164.75	-12.40	4.75	-7.65
7 Jul 2011	160.00	161.65	-12.40	1.65	-10.75
6 Jul 2011	160.00	163.50	-12.40	3.50	-8.90
5 Jul 2011	160.00	165.50	-12.40	5.50	-6.90
4 Jul 2011	160.00	162.50	-12.40	2.50	-9.90
1 Jul 2011	160.00	160.50	-12.40	.50	-11.90
30 Jun 2011	160.00	157.05	-12.40	-2.94	-15.35
29 Jun 2011	160.00	168.50	-12.40	8.50	-3.90
28 Jun 2011	160.00	164.25	-12.40	4.25	-8.15
27 Jun 2011	160.00	158.50	-12.40	-1.50	-13.90
24 Jun 2011	160.00	163.50	-12.40	3.50	-8.90
23 Jun 2011	160.00	164.10	-12.40	4.09	-8.30
22 Jun 2011	160.00	164.00	-12.40	4.00	-8.40
21 Jun 2011	160.00	174.00	-12.40	14.00	1.60
17 Jun 2011	160.00	174.50	-12.40	14.50	2.10
16 Jun 2011	160.00	173.50	-12.40	13.50	1.10
15 Jun 2011	160.00	175.00	-12.40	15.00	2.60
14 Jun 2011	160.00	177.25	-12.40	17.25	4.85
13 Jun 2011	160.00	180.35	-12.40	20.35	7.94
10 Jun 2011	160.00	184.45	-12.40	24.45	12.05
9 Jun 2011	160.00	189.40	-12.40	29.40	17.00
8 Jun 2011	160.00	189.00	-12.40	29.00	16.60
7 Jun 2011	160.00	184.50	-12.40	24.50	12.10
6 Jun 2011	160.00	189.50	-12.40	29.50	17.10
3 Jun 2011	160.00	193.00	-12.40	33.00	20.60
2 Jun 2011	160.00	191.45	-12.40	31.45	19.05
1 Jun 2011	160.00	187.65	-12.40	27.65	15.25
31 May 2011	160.00	189.50	-12.40	29.50	17.10
27 May 2011	160.00	197.00	-12.40	37.00	24.60
26 May 2011	160.00	198.50	-12.40	38.50	26.10
25 May 2011	160.00	193.25	-12.40	33.25	20.85
24 May 2011	160.00	191.35	-12.40	31.35	18.95
23 May 2011	160.00	193.50	-12.40	33.50	21.10
20 May 2011	160.00	194.00	-12.40	34.00	21.60
19 May 2011	160.00	193.50	-12.40	33.50	21.10
18 May 2011	160.00	191.00	-12.40	31.00	18.60
17 May 2011	160.00	180.50	-12.40	20.50	8.10
16 May 2011	160.00	177.75	-12.40	17.75	5.35
13 May 2011	160.00	175.25	-12.40	15.25	2.85
12 May 2011	160.00	172.50	-12.40	12.50	.09
11 May 2011	160.00	175.65	-12.40	15.65	3.25
10 May 2011	160.00	179.00	-12.40	19.00	6.60
9 May 2011	160.00	177.75	-12.40	17.75	5.35
6 May 2011	160.00	168.75	-12.40	8.75	-3.65
5 May 2011	160.00	167.60	-12.40	7.59	-4.80
4 May 2011	160.00	168.15	-12.40	8.15	-4.24
3 May 2011	160.00	172.00	-12.40	12.00	-.40
28 Apr 2011	160.00	169.65	-12.40	9.65	-2.74
27 Apr 2011	160.00	174.60	-12.40	14.60	2.19
26 Apr 2011	160.00	180.00	-12.40	20.00	7.60
21 Apr 2011	160.00	177.40	-12.40	17.40	5.00
20 Apr 2011	160.00	178.25	-12.40	18.25	5.85
19 Apr 2011	160.00	174.10	-12.40	14.10	1.69
18 Apr 2011	160.00	170.75	-12.40	10.75	-1.65
15 Apr 2011	160.00	164.50	-12.40	4.50	-7.90
14 Apr 2011	160.00	165.50	-12.40	5.50	-6.90
13 Apr 2011	160.00	166.90	-12.40	6.90	-5.49
12 Apr 2011	160.00	167.75	-12.40	7.75	-4.65
11 Apr 2011	160.00	170.00	-12.40	10.00	-2.40
8 Apr 2011	160.00	169.50	-12.40	9.50	-2.90
7 Apr 2011	160.00	169.25	-12.40	9.25	-3.15
6 Apr 2011	160.00	171.35	-12.40	11.35	-1.05
5 Apr 2011	160.00	171.05	-12.40	11.05	-1.34
4 Apr 2011	160.00	171.20	-12.40	11.20	-1.20
1 Apr 2011	160.00	167.50	-12.40	7.50	-4.90
31 Mar 2011	160.00	167.55	-12.40	7.55	-4.84
30 Mar 2011	160.00	162.50	-12.40	2.50	-9.90
29 Mar 2011	160.00	161.75	-12.40	1.75	-10.65
28 Mar 2011	160.00	163.00	-12.40	3.00	-9.40
25 Mar 2011	160.00	161.75	-12.40	1.75	-10.65
24 Mar 2011	160.00	158.00	-12.40	-2.00	-14.40
23 Mar 2011	160.00	156.25	-12.40	-3.75	-16.15
22 Mar 2011	160.00	156.00	-12.40	-4.00	-16.40
21 Mar 2011	160.00	159.25	-12.40	-.75	-13.15
18 Mar 2011	160.00	163.30	-12.40	3.30	-9.09
17 Mar 2011	160.00	158.20	-12.40	-1.80	-14.20
16 Mar 2011	160.00	148.60	-12.40	-11.40	-23.80
15 Mar 2011	160.00	145.00	-12.40	-15.00	-27.40
14 Mar 2011	160.00	151.00	-12.40	-9.00	-21.40
11 Mar 2011	160.00	153.50	-12.40	-6.50	-18.90
10 Mar 2011	160.00	154.50	-12.40	-5.50	-17.90
9 Mar 2011	160.00	155.95	-12.40	-4.05	-16.45
8 Mar 2011	160.00	157.50	-12.40	-2.50	-14.90
7 Mar 2011	160.00	161.25	-12.40	1.25	-11.15
4 Mar 2011	160.00	163.00	-12.40	3.00	-9.40
3 Mar 2011	160.00	163.30	-12.40	3.30	-9.09
2 Mar 2011	160.00	161.00	-12.40	1.00	-11.40
1 Mar 2011	160.00	163.00	-12.40	3.00	-9.40
28 Feb 2011	160.00	164.50	-12.40	4.50	-7.90
25 Feb 2011	160.00	166.75	-12.40	6.75	-5.65
24 Feb 2011	160.00	163.75	-12.40	3.75	-8.65
23 Feb 2011	160.00	159.25	-12.40	-.75	-13.15
22 Feb 2011	160.00	160.00	-12.40	.00	-12.40

Performance of £160/t strike Call Option for Nov-11, purchased on 22-Feb-2011 @£18/t

Chart.

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Date	Nov-11′ futures	Call option strike price	Call option premium	Maximum wheat price using option (£/t)	Current wheat price using option (£/t)	Wheat price if the market falls to £120/t (£/t)
22 Jul 2011	161.00	160.00	18.00	178.00	178.00	138.00
21 Jul 2011	163.00	160.00	18.00	178.00	178.00	138.00
20 Jul 2011	165.65	160.00	18.00	178.00	178.00	138.00
19 Jul 2011	165.90	160.00	18.00	178.00	178.00	138.00
18 Jul 2011	162.00	160.00	18.00	178.00	178.00	138.00
15 Jul 2011	165.00	160.00	18.00	178.00	178.00	138.00
14 Jul 2011	166.15	160.00	18.00	178.00	178.00	138.00
13 Jul 2011	167.15	160.00	18.00	178.00	178.00	138.00
12 Jul 2011	161.50	160.00	18.00	178.00	178.00	138.00
11 Jul 2011	162.50	160.00	18.00	178.00	178.00	138.00
8 Jul 2011	164.75	160.00	18.00	178.00	178.00	138.00
7 Jul 2011	161.65	160.00	18.00	178.00	178.00	138.00
6 Jul 2011	163.50	160.00	18.00	178.00	178.00	138.00
5 Jul 2011	165.50	160.00	18.00	178.00	178.00	138.00
4 Jul 2011	162.50	160.00	18.00	178.00	178.00	138.00
1 Jul 2011	160.50	160.00	18.00	178.00	178.00	138.00
30 Jun 2011	157.05	160.00	18.00	178.00	175.05	138.00
29 Jun 2011	168.50	160.00	18.00	178.00	178.00	138.00
28 Jun 2011	164.25	160.00	18.00	178.00	178.00	138.00
27 Jun 2011	158.50	160.00	18.00	178.00	176.50	138.00
24 Jun 2011	163.50	160.00	18.00	178.00	178.00	138.00
23 Jun 2011	164.10	160.00	18.00	178.00	178.00	138.00
22 Jun 2011	164.00	160.00	18.00	178.00	178.00	138.00
21 Jun 2011	174.00	160.00	18.00	178.00	178.00	138.00
20 Jun 2011	172.40	160.00	18.00	178.00	178.00	138.00
17 Jun 2011	174.50	160.00	18.00	178.00	178.00	138.00
16 Jun 2011	173.50	160.00	18.00	178.00	178.00	138.00
15 Jun 2011	175.00	160.00	18.00	178.00	178.00	138.00
14 Jun 2011	177.25	160.00	18.00	178.00	178.00	138.00
13 Jun 2011	180.35	160.00	18.00	178.00	178.00	138.00
10 Jun 2011	184.45	160.00	18.00	178.00	178.00	138.00
9 Jun 2011	189.40	160.00	18.00	178.00	178.00	138.00
8 Jun 2011	189.00	160.00	18.00	178.00	178.00	138.00
7 Jun 2011	184.50	160.00	18.00	178.00	178.00	138.00
6 Jun 2011	189.50	160.00	18.00	178.00	178.00	138.00
3 Jun 2011	193.00	160.00	18.00	178.00	178.00	138.00
2 Jun 2011	191.45	160.00	18.00	178.00	178.00	138.00
1 Jun 2011	187.65	160.00	18.00	178.00	178.00	138.00
31 May 2011	189.50	160.00	18.00	178.00	178.00	138.00
27 May 2011	197.00	160.00	18.00	178.00	178.00	138.00
26 May 2011	198.50	160.00	18.00	178.00	178.00	138.00
25 May 2011	193.25	160.00	18.00	178.00	178.00	138.00
24 May 2011	191.35	160.00	18.00	178.00	178.00	138.00
23 May 2011	193.50	160.00	18.00	178.00	178.00	138.00
20 May 2011	194.00	160.00	18.00	178.00	178.00	138.00
19 May 2011	193.50	160.00	18.00	178.00	178.00	138.00
18 May 2011	191.00	160.00	18.00	178.00	178.00	138.00
17 May 2011	180.50	160.00	18.00	178.00	178.00	138.00
16 May 2011	177.75	160.00	18.00	178.00	178.00	138.00
13 May 2011	175.25	160.00	18.00	178.00	178.00	138.00
12 May 2011	172.50	160.00	18.00	178.00	178.00	138.00
11 May 2011	175.65	160.00	18.00	178.00	178.00	138.00
10 May 2011	179.00	160.00	18.00	178.00	178.00	138.00
9 May 2011	177.75	160.00	18.00	178.00	178.00	138.00
6 May 2011	168.75	160.00	18.00	178.00	178.00	138.00
5 May 2011	167.60	160.00	18.00	178.00	178.00	138.00
4 May 2011	168.15	160.00	18.00	178.00	178.00	138.00
3 May 2011	172.00	160.00	18.00	178.00	178.00	138.00
28 Apr 2011	169.65	160.00	18.00	178.00	178.00	138.00
27 Apr 2011	174.60	160.00	18.00	178.00	178.00	138.00
26 Apr 2011	180.00	160.00	18.00	178.00	178.00	138.00
21 Apr 2011	177.40	160.00	18.00	178.00	178.00	138.00
20 Apr 2011	178.25	160.00	18.00	178.00	178.00	138.00
19 Apr 2011	174.10	160.00	18.00	178.00	178.00	138.00
18 Apr 2011	170.75	160.00	18.00	178.00	178.00	138.00
15 Apr 2011	164.50	160.00	18.00	178.00	178.00	138.00
14 Apr 2011	165.50	160.00	18.00	178.00	178.00	138.00
13 Apr 2011	166.90	160.00	18.00	178.00	178.00	138.00
12 Apr 2011	167.75	160.00	18.00	178.00	178.00	138.00
11 Apr 2011	170.00	160.00	18.00	178.00	178.00	138.00
8 Apr 2011	169.50	160.00	18.00	178.00	178.00	138.00
7 Apr 2011	169.25	160.00	18.00	178.00	178.00	138.00
6 Apr 2011	171.35	160.00	18.00	178.00	178.00	138.00
5 Apr 2011	171.05	160.00	18.00	178.00	178.00	138.00
4 Apr 2011	171.20	160.00	18.00	178.00	178.00	138.00
1 Apr 2011	167.50	160.00	18.00	178.00	178.00	138.00
31 Mar 2011	167.55	160.00	18.00	178.00	178.00	138.00
30 Mar 2011	162.50	160.00	18.00	178.00	178.00	138.00
29 Mar 2011	161.75	160.00	18.00	178.00	178.00	138.00
28 Mar 2011	163.00	160.00	18.00	178.00	178.00	138.00
25 Mar 2011	161.75	160.00	18.00	178.00	178.00	138.00
24 Mar 2011	158.00	160.00	18.00	178.00	176.00	138.00
23 Mar 2011	156.25	160.00	18.00	178.00	174.25	138.00
22 Mar 2011	156.00	160.00	18.00	178.00	174.00	138.00
21 Mar 2011	159.25	160.00	18.00	178.00	177.25	138.00
18 Mar 2011	163.30	160.00	18.00	178.00	178.00	138.00
17 Mar 2011	158.20	160.00	18.00	178.00	176.20	138.00
16 Mar 2011	148.60	160.00	18.00	178.00	166.60	138.00
15 Mar 2011	145.00	160.00	18.00	178.00	163.00	138.00
14 Mar 2011	151.00	160.00	18.00	178.00	169.00	138.00
11 Mar 2011	153.50	160.00	18.00	178.00	171.50	138.00
10 Mar 2011	154.50	160.00	18.00	178.00	172.50	138.00
9 Mar 2011	155.95	160.00	18.00	178.00	173.95	138.00
8 Mar 2011	157.50	160.00	18.00	178.00	175.50	138.00
7 Mar 2011	161.25	160.00	18.00	178.00	178.00	138.00
4 Mar 2011	163.00	160.00	18.00	178.00	178.00	138.00
3 Mar 2011	163.30	160.00	18.00	178.00	178.00	138.00
2 Mar 2011	161.00	160.00	18.00	178.00	178.00	138.00
1 Mar 2011	163.00	160.00	18.00	178.00	178.00	138.00
28 Feb 2011	164.50	160.00	18.00	178.00	178.00	138.00
25 Feb 2011	166.75	160.00	18.00	178.00	178.00	138.00
24 Feb 2011	163.75	160.00	18.00	178.00	178.00	138.00
23 Feb 2011	159.25	160.00	18.00	178.00	177.25	138.00
22 Feb 2011	160.00	160.00	18.00	178.00	178.00	138.00