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Price Risk Management by Futures Markets and Public Warehousing
58-65Views:98The principal achievement of this paper is the combinative use of two market institutions: public warehousing and commodity exchange and how their joint application is beneficial for the players on the grain market. Based on a theoretical foundation, a calculation model was developed in order to assist short and long-term marketing decisions. It allows all the three participants of the market: producers, consumers and traders, to use this model in order to establish their own business strategy. The model can be used to analyse factors influencing the establishment of price; therefore, it can be also used for policy-making decisions.
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Financial interrelationships of public warehousing
80-89Views:94In my paper I examined the institutional and market connections warehouses use emphasising the role of financial institutions. I stressed that for the proper functioning of a warehouse the mutual trust of the economic participants is required. This presupposes a tight relationship between warehouses and banks, as banks have to accept warehouse warrants in such a manner that the credit suppliant can more readily access current assets credit.
Today, we can say that the moneylender bank is strongly confident about deals involving warehouse credit. The amount of goods stored in warehouses is increasing. Warehouse deals offer better conditions to depositors, which can be explained by the fact that the creditor does not examine the management and credit standing of the depositor. Most important for them is that the goods provide enough collateral to ensure marketability, and that the warehouse storage conditions are proper. On the other hand, with the support of an interest subsidy system credit is obtainable at very auspicious conditions. To top it all off, and this is the most important aspect participants can receive access to funds unavailable to them in any other case.