HEDGING INSTRUMENTS IN PRICE RISKS MANAGEMENT (on the example of Ukraine’s agricultural and energy markets)
DOI:
https://doi.org/10.15407/economyukr.2024.03.019Keywords:
risk; hedging; derivatives; agricultural market; energy market; exchange; management.Abstract
Risks are identified according to their sources, the essence of the agricultural and energy markets’ risks in the context of today’s realities is determined. Ways and methods of risk management are summarized, including: decision-making based on available information; obtaining additional information; transfer of risk; diversification of activities, limitation; self-insurance, reservation; insurance; hedging The main hedging instruments are characterized, the essence and features of derivatives are defined, certain negative aspects of forward contracts, advantages of futures contracts and options are indicated. The importance of using hedging instruments in Ukraine is substantiated. Measures are proposed to stimulate the functioning of derivatives on the agricultural market in Ukraine, among which the following are identified as key: 1) educating Ukrainian agricultural market participants on the importance of using financial instruments to minimize price risks; 2) legislative regulation; 3) organization of a platform for derivatives trading and expansion of opportunities for their use both on the national market and through simple and cheap access of Ukrainian market participants to international derivatives markets. The expediency of a single trading platform within Ukraine’s specialized market, which will contribute to ensuring liquidity on it, is substantiated; 4) creation of accompanying infrastructure (certified warehouses, elevators; modern quality control and product standardization systems; supply channels, transport logistics; infrastructure for rapid circulation of electronic warehouse certificates); 5) organization of an effective financial infrastructure to enable commodity derivatives trading in Ukraine; 6) approval of the state program for the development of hedging.
Under war conditions, the implementation of a system of measures in the agro-industrial complex and the energy sector, modernization of other sectoral markets are carried out when possible, but these steps will be extremely important in the system of post-war development and reconstruction of Ukraine.
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