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The module covers a variety of topics relating to the pricing of commodity forwards.
The target audience is anyone involved in the physical or financial commodities market.
Download the Commodity Forwards Course Outline here
By the end of the module the participant will be able to:
- Explain the different factors that contribute to the absolute level of commodity prices
- Distinguish between a market in backwardation and in contango
- Explain the factors that influence the curvature of a forward curve
- Outline the principles of pricing commodities relative to a given benchmark
- Determine the impact of the passage of time on the value of a forward position
- Understanding the different shapes of the forward curve
- Which participants impact the different parts of the forward curve
- Price formation within a commodity context
- Contango & backwardation
- Deriving forward prices for gold & energy prices
- Which markets have a tendency to exhibit backwardation and contango
- Characteristics of markets in contango and backwardation
- Quality differentials relative to a benchmark curve
- Impact of the passage of time
Neil Schofield is the principal trainer for FMT Ltd. He was previously global head of financial market training at Barclays Capital. He teaches primarily on the rates business, covering all of the major asset classes and their respective derivative products from foreign exchange through to commodities. He is author of two books, Commodity Derivatives: Markets and Applications” and “Trading the Fixed Income, Inflation and Credit Markets”.
39 minutes 31 seconds
A basic understanding of financial concepts would be useful.