Applied Essentials - a Concise Guide to the Commodity Markets

This book is a comprehensive and practical guide to the principal commodity markets written by an experienced practitioner. Commodity markets are by no means perfect; at best they are opaque. Participants who blindly apply complex theoretical models to these markets often come to grief. This book gives the market newcomer a framework to facilitate successful commodity price risk management, learning from others' past mistakes, and taking into account the real and tangible nature of the physical underlying.

Commonalities with and differences to other financial markets are discussed. The impact of fundamental commodity concepts such as contango, backwardation, physical delivery and storage on paper commodity markets are explored. The largest commodity markets (namely metals, energy and agricultural products) are presented in detail, together with their specific characteristics. Structures appropriate for market participants with real commodity exposures are presented, tailored by commodity sector where appropriate. Investors, those market participants with a discretionary commodity exposure, have come to play an increasingly important role in commodity price dynamics. Investor product evolution and its impact on the global commodity markets are discussed. Consideration is also given to the house-keeping aspects of trade execution, documentation and life-of-trade management.

This book is a distillation of the author's experiences and aims to be the book she wishes she had on her desk when she first moved into the weird and wonderful world of commodities.