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
futures contracts for agricultural products is not surprising. Accession of Poland to EU
resulted in introduction of new intervention instruments and in stabilization of many
agricultural markets, which definitely limits the activity of a commodity exchange.
Besides, on Polish commodity exchanges, also before accession of Poland to EU, there
was a lack of entities willing to enter futures transactions and such markets have never
developed well enough. At present, this market is practically not functioning, waiting
for new legal regulations connected with conducting futures and options transactions. In
this situation, the possibility of using hedging transactions on other European
exchanges, for example, in Budapest or on the Matif Exchange, should be considered.
However, analyses of variations in the prices in the grain market in Poland, as well as in
the prices of transactions on other European exchanges indicate that these variations not
always have similar directions and similar dynamics – which is a basic condition of
effective realization of hedging transactions. Thus, Polish farmers and processors cannot
protect themselves effectively with the use of exchange mechanisms, neither in the
domestic exchange nor in other European exchanges. [3, 246-251]
On the other hand, the market of exchange rate futures and options contracts on WGT
keeps developing. Initially, there were introduced contracts for exchange rates of USD,
EUR and CHF in relation to PLN and for the exchange rate of USD in relation to EUR
(WGT’s offer in 2003). In subsequent years, this offer was considerably extended,
covering next currencies important for Polish importers and exporters: CZK, HUF,
GBP, JPY, CAD and AUD.
In 2008, there were 19 “large” exchange rate contracts on WGT, however so-called
“small” contracts (with approx. fivefold lower values) and five currency contracts
settled in cash were also quoted. Besides, 5 “large” and 5 “small” options for currency
futures contracts were also introduced [4]. So it seems that transactions with foreign
partners can be much better protected, but only in respect of the exchange rate risk. This
will be a serious problem until Poland enters into the Eurozone.
Summary
The analysis of variation in prices in the selected grain markets indicates that such
markets are operating, to a large extent, in an unpredictable manner, and decreasing the
scale of price fluctuations and regulating supply on the scale of a year would be
beneficial to all participants. However, a considerable part of mechanisms decreasing
this risk is still unavailable for Polish entities. The use of such mechanisms is profitable
only at a large scale of activity. Taking advantage of many other instruments is not
strictly connected with the scale of activity, however reaching for them depends on
increased awareness and willingness of the entities operating in the market. At present,
on WGT, there are very limited possibilities of securing commodity transactions in the
domestic market. Much better possibilities appear in the scope of securing international
contracts, because futures contracts and options for all basic currencies are present on
WGT. Possibilities of hedging occur with respect to all commodities settled in the
aforementioned currencies, but this is limited only to changes in currency prices, and
does not apply to changes in prices of a given commodity. An exchange rate is an
important element, which often conditions profitability of import and export
transactions, but the purchase and sale prices of commodities are equally important.
Considering limited possibilities of using other instruments decreasing the currency
risk, the futures contracts seem to be the most available and flexible instrument.
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