Risk Management & Hedging

ABM International General Trading LLC

Risk management has become a dominant factor in contemporary Business markets. As global markets develop and opportunities expand, so does the need for cautious, effective and intelligent risk management. Our highly qualified staff with long-term history of Risk management will help you determine whether you needs hedging, the potential costs and benefits, as well as which financial instruments to use.

Hedging is a way to ensure against financial risks via taking an offsetting position to the one in an asset. As a result of geopolitical risks and uncertainties in global economic growth, prices fluctuations range on markets significantly expands. To protect against the risk of violent prices fluctuations, the practice of commodities hedging using becomes more and more popular.

We, ABM Online Trading & Contract Market department are one of the largest department in our company which working with commercial companies across the globe that trade throughout process Agriculture & Food, Metals & Minerals, Petrochemical & Polymer, Petroleum Products, Paper & Cellulose Products. We provide commodity risk management, hedging, market intelligence and complete marketing services to traders, processors, manufacturers, elevators and end users.  For companies on both the supply side and the demand side, our financial tools are designed to help companies control risk, use the market to limit the impact of volatility, control input costs, protect inventory value, and enhance operational margins.

The trading of commodities and derivatives such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors.

What ABM International General Trading Co. can do?

  • Suggested how to fix consistent and stable cash flows

  • Suggested how to determine a purchase price of a commodity

  • Suggested how to reduce the existing cash position risk exposure

There are 3 ways to control the financial risks of your business. Our team can control the risks management in the following terms:

  1. Hedging of foreign exchange risks

Foreign exchange risk is the risk of losses because of an unfavorable exchange rate movement. It’s applicable to export and import merchants and foreign currency loans borrowers.

  1. Hedging of interest rates risks

Interest rates risk is the risk of losses because of an unfavorable interest rates. If the company borrows money to finance its activities, it will use derivatives contracts on interest-bearing instruments to hedge against interest rates increase.

If the company deposits funds, for example, an insurance company or a financial company that makes loans or credits, it will enter into derivatives contracts to hedge against interest rates decline.

  1. Freight rate hedging

Freight rate fluctuation risk is the risk of losses because of an unfavorable change of a price at which a cargo unit is delivered from one point to another by ship.

 

Due to the long history of our team in the field of hedging strategies, all of the 3 above items are best handled by our company.