Sborník 2009 díl 2. - Fakulta informatiky a managementu - Univerzita ...

Anna Olszańska POSSIBILITIES OF REDUCING THE PRICE RISK CONNECTED WITH
TRANSACTIONS IN AGRICULTURAL AND FOOD PRODUCTS IN DOMESTIC
AND INTERNATIONAL MARKETS ON THE EXAMPLE OF GRAIN MARKET
to PLN 840/t. Variation of these prices on the scale a year was quite different than in
case of previously analysed markets. The highest variation was recorded in 2005/2006
and 2006/2007 – 10.37%, and 13.16%, respectively. In the subsequent year, the prices
were much more stable, and the coefficient of their variation amounted to 5.24% only.
On the scale of a year, weekly market prices were also, to a large degree, unpredictable.
After harvests, the level of these prices was lowest on the scale of a farming year.
However, in the subsequent weeks, these prices fluctuated considerably. For example,
in 2007/2008, a significant increase in prices of wheat for human consumption was
recorded in August and September. In the subsequent months – till December, the prices
kept decreasing to achieve the maximum level in the period from March to April. In
2004/2005 and 2005/2006, before next harvests, the prices were slightly increasing,
while in 2006/20007 and 2007/2008 they were strongly decreasing. Similar trends are
observed in the market of fodder barley. In the market of fodder corn, price movements
were even more unpredictable. For example, in 2006/2007, a considerable increase in
prices was observed after harvests, and then a longer period of relative price
stabilization took place, while from August, a rapid increase was recorded. In the
subsequent year, the course of price changes was quite different and in the period before
subsequent harvests, a gradual decrease in prices took place. Therefore, protection
against price variations would be advisable, also because of unpredictable price
movements on the scale of a year.
Possibilities of reducing the price risk on the Warsaw Commodity Exchange
(WGT)
In Poland, commodity exchanges have started to be created since 1992. In the first year
of their operation, such exchanges conducted, first of all, spot cash transactions. In
various periods, a different number of exchanges were registered – from 40 in 1992 to
19 in 1998 (however, this does not mean that all of them were operating). In fact, most
of the operating exchanges were exchanges only in name, because the transactions
entered there and their organization did not fulfil the criteria of the exchange business.
In this period, ¾ of sales was concentrated in Poznań, Olsztyn, Warszawa, Lublin and
Gdańsk Exchanges. In this period, there were observed first attempts to introduce
futures and options contracts for agricultural products, however, turnover of such
products was not continuous. Trade in these contracts was of a speculating character, so
they rather could not be used for securing transaction prices in the cash market.
Warsaw Commodity Exchange (WGT) was established in 1995 as the last commodity
exchange in Poland after marketization of the economy in 1989. Even the Poznań
Commodity Exchange, which was established three years earlier, was much more
organizationally advanced. However, the new law, introduced in 2002, concerning
operation of commodity exchanges, broker’s office, and warehouses, caused that only
WGT met, in particular, capital requirements and only this exchange remained in the
Polish market. The steps taken towards consolidation of the exchanges existing in
Poland have also failed. Whereas, since 2001, consolidation of the exchange
transactions market has taken place.
On WGT, there have been introduced futures contracts for basic agricultural products,
such as wheat for human and animal consumption, and slaughter pigs. In the initial
period of WGT operation, there were attempts to introduce futures contracts for other
agricultural products, among other things, for slaughter cattle. A limited amount of
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