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Optimising Biofuels and Feedstock Risk Management Joachim Emanuelsson, COO Starsupply Commodity Brokers.

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Presentation on theme: "Optimising Biofuels and Feedstock Risk Management Joachim Emanuelsson, COO Starsupply Commodity Brokers."— Presentation transcript:

1 Optimising Biofuels and Feedstock Risk Management Joachim Emanuelsson, COO Starsupply Commodity Brokers

2 Today’s Topics Market Factors affecting the Biofuel “paper” markets Managing Risk Across the Biofuel Supply Chain Physical and Derivative price differences

3 Market Factors affecting the Biofuel “paper” markets Related markets, Agricultural and Soft commodity markets and their movements plays more and more of a role Changes in Foreign Exchange $/€ and $/myr Gasoil price moves Transportation and Logistical issues Global growth and super cycles

4 Market Factors Physical Supply & Demand Vegetable Oil Blend Economics Gasoil Price Ags/Soft $/€ Bio- Fuels Regulations Commodity Super Trends Food vs. Fuel Global Growth

5 Corn and FAME 0

6 Sugar and FAME 0

7 Wheat and FAME 0

8 Super Cycles

9 Managing Risk Across the Bio-Fuels Chain Managing risk across the bio fuel chain is crucial, gone are days of flat price trading Correlation hedges Instruments; Swaps, Options and Futures Clearing and counterpart risk control

10 Bio-Fuel Supply Chain Soy Beans Rapeseed Bean Oil CPO RSO SME RME PME FAME +5 FAME 0 FAME -5 FAME -10 FAME -15 RME Ethanol T1 Ethanol T2 Hedges Available Sugar/Corn/ Wheat Ethanol

11 Signs of a Good Hedge Basis for a good hedge – Liquid markets – Data availability – Price discovery is easy – Access to clearing or credit lines – High correlation

12 Good Correlation

13 Poor correlation

14 RME Swaps vs. Physical RME Proportional Change Correlation: 0.8746

15 CPO Swaps

16 Physical and paper price differences We have seen paper trade at a significant discount to physical Inherent cost handling physical, financing, transport etc. Gasoil is averaging -12 USD/MT FAME 0 is averaging -9.40 USD/MT More Liquidity and counterparts Limited risk limits available globally

17 FAME Paper vs. FAME Physical

18 Physical vs. Paper Spread

19 Gasoil Paper vs. Physical

20 Joachim Emanuelsson Starsupply Commodity Brokers T 41-22 365 5503 F 41-22 361 8380 M 41-(0)78 904 4829 joachim@starsupply.ch yahoo: joachim_starsupply www.starcb.com

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