Entries for ' commodity trading'

Coffee Trading SoftwareSecond only to oil, coffee is widely considered to be the most valuable legally traded commodity in the world, with an estimated 2.25 billion cups of coffee consumed worldwide every day. However, consistently high demand does not mean that coffee farmers, traders, buyers, and sellers are rolling in the beans. In fact, coffee has a history of significant price volatility that has greatly affected the ability of market participants to turn a profit.



According to Fairtrade International, this volatility spurred the creation of the first International Coffee Agreement in 1962, which was designed to stabilize the market by introducing quotas to withhold excessive coffee supplies. In 1994, a new version of this agreement stipulated that prices would no longer be regulated, and that same year, prices escalated to a high of $2.80 per pound thanks to a frost threatening crops in Brazil. Then in 2001, coffee prices fell to a thirty year low of $.45 per pound almost overnight due to overproduction, devastating farmers and putting many out of business.



Fast forward to 2011, when prices climbed to a 14-year high, spurring growers to expand coffee-growing lands and plant high-yielding tree varieties. Because of this, we are now experiencing what the Wall Street Journal calls the biggest coffee bust in over a decade due to overproduction. Arabica coffee on the ICE Futures U.S. exchange recently fell to their lowest levels since September 2009.



In order to maintain profit margins amidst never ending volatility, companies engaged in the buying, trading, and selling of coffee must have sophisticated commodity trading and risk management (CTRM) solutions providing business intelligence and analysis tools that enable smarter decisions, minimize risk, and optimize supply chain management. Spreadsheets do not provide the sophisticated functionality needed for maximizing efficiency and profitability in today’s unpredictable environment.



Coffee & Cocoa International
has published an article featuring Triple Point’s Brian Seidman, VP, Solutions Director, Agriculture, exploring these very issues. It discusses how companies including Armajaro Trading and Mercon Coffee Group are leveraging Triple Point’s Commodity XL for Agriculture solution to mitigate market risk, maximize profitability, and achieve optimized supply chain management. Read it now.

Over the past decade, Brazil has grown to be the largest economy in Latin America and a major player in global agricultural production. As the world’s largest exporter of sugar, it produces around 20% of the world’s supply annually. In addition, Brazil is a leading exporter of chicken, coffee and soy beans. A significant portion of the world’s economy is dependent on the continued success of agricultural exports, and industry leaders are recognizing the need for advanced commodity trading and risk management (CTRM) solutions that help maintain a competitive advantage by managing volatility and optimizing supply chain efficiency.

In an effort to support the growing need for advanced CTRM solutions in the Brazilian market, Triple Point recently hosted an agriculture-focused Commodity Management lunch in São Paulo. More than 30 regional industry executives from companies including Algar Agro, ADM, BRF Brazil Foods, and Noble Group gathered at the stunning Bar Des Arts for an afternoon of presentations, networking, and fine dining.

Triple Point executives teamed up with Guilherme Nastari of DATAGRO and Eduardo Barros of Accenture to give a complete perspective of current agriculture market trends and Commodity Management best practices.  Attendees learned how gaining a transparent, integrated view of physical and financial position in real-time enables them to maximize the impact of volatility on the bottom line. The event was very successful with positive feedback from all who attended.

Visit our Web site to learn how Triple Point solutions can help manage volatility and risk in your business.

Really, there is a National Cereal Day…

Who doesn’t love cereal?  Sometimes it’s my three square meals for the day, and a midnight snack.  The cereal aisle is my favorite destination at the supermarket, as I’m sure it is for many of you as well.

Supermarkets offer an assortment of cereals. There are the sugary and fruity cereals for the kids, and let’s face it, some adults too. And for the responsible adults, there are the organic, healthy, and high fiber cereals. The cereal industry is enormous and ever-changing due to the volatile nature of the commodities that are used.  The primary ingredients of cereal consist of grains, sugar, cocoa, sweeteners, and other additives like vitamins and minerals. 

The world agricultural markets have experienced volatility brought about by several factors including poor harvests, sustained demand, increased use of agricultural products for fuel, and possibly the increase in speculative trading. Consumer Products (CP) companies in particular have seen comĀ­modities become a much larger and more volatile part of their cost structure.

By implementing a fully integrated, scalable, end-to-end approach to commodity management, organizations improve real-time visibility into enterprise market risk and are able to move in and out of positions more quickly.  This is why notable CP companies use Triple Point’s Commodity Management software.  Learn More.

Are you struggling with disparate commodity trading systems, overuse of manual processes and spreadsheets, and underuse of third party solutions?  Have dramatic changes to the energy markets outpaced your technology capabilities?

If you know you need to upgrade your Energy Trading and Risk Management (ETRM) system, but are overwhelmed by the idea of ETRM vendor evaluation, ETRM system selection, and ETRM implementation, you are not alone. Structure’s Baris Ertan recently wrote an article on how to determine ETRM requirements.  He explains that if you ensure the right ETRM requirements, “you’ll be rewarded with a system that meets your needs and prepares the organization to take advantage of the opportunities afforded by today’s complex and ever-changing energy markets.”

A few tips that I found particularly useful include:

1. Create a process review that includes an “as-is” baseline and “to-be” vision.  Market demand, price volatility, and derivatives legislation continue to drive change in the energy markets. He smartly advises to incorporate planned growth in commodities, instrument types, physical assets, geographies, markets, currencies, etc.

2.  
Engage front, middle, and back offices in requirements gathering. The best solutions for staying ahead of the curve in today’s complex markets are end-to-end solutions. It is critical to involve IT, compliance, legal, procurement, and senior management in this strategic initiative.

3. Consider integration strategy early
. Does a best-of-breed or a single system approach best fit your resources and capabilities? Baris explains that “an early investment in time on this process pays dividends. It is a key input into a requirements matrix that feeds vendor evaluation, implementation planning and estimations, solution design, testing, and ultimately deployment.”

4. Conduct scenario
-based demonstrations.  Your business requirements are unique.  Baris advises, “it’s crucial to translate business requirements into detailed business scenarios that each vendor can model and use to showcase its solution.”  I couldn’t agree more.

Determining your ETRM requirements is vital in conducting a rigorous vendor evaluation that renders the best functional and technical fit for your organization. A company can’t underestimate the importance of doing
it right – taking shortcuts or rushing the process can have severe long-term financial and operational ramifications that are difficult if not impossible to rectify.    


For more ideas on how to determine ETRM requirements, view on-demand Triple Point’s recent Commodity Trading, Procurement, and Risk 101 webinar.  It highlights the latest must-have requirements for ETRM success.

Events

Procemin 10th International Mineral Processing Conference

October 15-18, 2013 | Chile

XXV Brazilian National Meeting of Mineral Treatment and Extractive Metallurgy (ENTMME)

October 20-24, 2013 | Brazil



Opinions expressed on this blog are those of its individual contributors, and do not necessarily reflect the views of Triple Point Technology, Inc.