Reports CTRM for Agricultural and Soft Commodities | Page 43
CTRM for Ags & Softs
verification, weighing and stowage examination services that accurately and consistently describe the quality and quantity
of the commodities being bought and sold…”
Globally, commercial inspection services, such as Interek, provide similar services necessary to ensure grains are at
contract spec. The use of any particular service will be covered by contract agreements.
CTRM Development in These Markets
Managing business activities across the value chain of grains, beans
and seeds requires a number of technologies outside the scope of
traditional CTRM, including:
Farm Technologies - Ag Sciences
Elevators/Storage Technologies – Origination, Storage,
Trading (Selling)
Functions – Make Markets, Contract Supplies, Transact on
COBT (forwards and spot), sometimes blending and drying
Logistics Technologies – Trucking, scales, Direct ship from
farm to consumer, Inventory management – in transit and
offsite (sitting on farm)
Manufacturing Technologies – machine control, production
scheduling
Product distribution technologies – product/SKU tracking
“Traditionally elevators run flat books –
meaning their inventory is fully hedged;
however, “after market” (those that arrive
after the inventory books are closed for
the day) deliveries create exposures and
are generally not accounted for until the
following day.As such, there can be a
mismatch between actual volumes under
contract and market risks associated
with contracted physical supplies.”
Shesh Davis – Aspect
Focusing on CTRM requirements in this segment, given the increasing
consolidation of market entities across all sub-segments (farms,
“Run Tickets reflect actual volumes elevators, merchants, etc.), the larger and growing players are
received at elevator – not deal volumes. increasingly looking to what would be considered traditional CTRM
This mismatch creates exposures that
capabilities
to
address
their
increasingly
complex
businesses.Commonly, solutions servicing these market segments
have historically been unaccounted for
until settlements.Increasingly, elevator provide a number of increasingly critical capabilities, particularly in the
areas of deal capture, inventory movements and valuation, and risk
operators are seeking to improve the
management (including hedging).
visibility of profitability and require a
more real-time approach.”
Shesh Davis - Aspect
Some of these entities will additionally have unique needs due to the
nature of their operations, such as elevator operators, as outlined by
Shesh Davis of Aspect.
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