Commodity Trading & Risk Management

Commodity Trading & Risk Management

Moving commodities from where they are to where they are needed with efficiency and at the lowest possible landed cost is of interest to both producers and the end consumers of the commodity. Disruptive shifts in global production and consumption model have changed the commodity procurement pattern in an already volatile commodities market.

Explosive economic growth has also altered and expanded the trade routes, opened new sources of production and enabled the emergence of a globalized, competitive marketplace driving the global commodities trading and supply model dynamics exponentially.

While commodity markets have always been volatile, decision making in real-time is critical in today’s markets, with events from extreme weather, geopolitical trade-wars, tariffs, etc. which impacts the profitability significantly and even a % gain can significantly improvise the P & L.

Hence, the trading team needs high-quality operations with the right platforms to execute transactions profitably. The changing dynamics of the global supply chain of the commodity cannot be managed with disintegrated systems, myriad of data sets and dismal flow of information between various stakeholders involved.

Organizations who do not embrace digital automation in commodity sourcing can lose insights into their trading decision-making process, purchasing inefficiencies, deficiently managed risks to incur costs that can impact the key KPI’s like inventory turnover ratios, working capital management, escalating finance charges and not being able to mitigate risks involved in short-supply or over-supply of commodities.

The Trading team needs high-quality operations with the right platforms to execute transactions profitably. The changing dynamics of the global supply chain of the commodity cannot be managed with disintegrated systems, myriad of data sets and dismal flow of information.

When trading is surrounded by risks and volatility, index pricing and non-standard contract invoicing, customers really need an ERP integrated CTRM System for improved visibility & control across all stakeholders.

Well integrated CTRM software uses single-source-of-data enabling multi-level book structures, report physical and financial positions by the book, trader, strategy, commodity, etc., run risk metrics such as Mark-to-Market and Value at Risk, manage counter-party risk and use hedging strategies for better price risk management.

Furthermore, the entire organization benefits from automated workflows and auto-filing of internal and external documents, such as bills of lading, product specifications and certificates of quality and compliance.

With Sonata’s unique ERP integrated CTRM platform, you can achieve better visibility on your commodity sourcing & trading needs, single source-of-trade data, superior control over trading decisions and reduction of cost structure for better P & L.