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Price Risk Management

African Cotton Producers. Price Risk Management. A presentation to the European Commission Pairs 5-6 th July 2004 Nigel Scott, Global Head Commodity Financing and Hedging.

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Price Risk Management

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  1. African Cotton Producers Price Risk Management A presentation to the European Commission Pairs 5-6th July 2004 Nigel Scott, Global Head Commodity Financing and Hedging Rabobank International

  2. "This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice and is not intended for the use of private customers as defined by the rules of the FSA. Members of the Rabobank Group trade on their own account and may from time to time hold or act as market makers in securities mentioned in this document, or may act as advisors, brokers or commercial / investment bankers to persons mentioned in this document. Please note that no member of the Rabobank Group makes any warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. All parties are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or Regulatory implications. Rabobank International is the trading name used by Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.  Rabobank International London Branch is regulated by the FSA and De Nederlandsche Bank." Rabobank International

  3. Rabobank Nederland Member Banks Wholesale banking Rabobank International Retail banking Member banks Other Support Gilde Venture Capital Interpolis Insurance Sarasin & Cie International Private Banking Robeco Asset Management Schretlen Private Banking Alex Internet Brokerage Stroeve Stock Brokerage De Lage Landen International Leasing Rabobank, the largest financial service provider in the Netherlands Member banks: 328 Members: 1.4 Mio AAA rated by Moody’s and Standard and Poor’s Rabobank International

  4. America Atlanta Buenos Aires Chicago Curaçao Dallas Mexico New York* Santiago de Chile San Francisco Sao Paulo Toronto Washington D.C. With a focus on food & agribusiness outside the Netherlands Asia Bangkok* Beijing Hong Kong Istanbul Jakarta Mumbai* New Delhi Shanghai Singapore* Taipei Tokyo X X X Europe Amsterdam* Antwerp* Dublin Edinburgh Frankfurt* Geneva Guernsey London* Luxembourg Madrid Milan Moscow Paris* Poznan Utrecht Warsaw* Zurich X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Australia & New Zealand Auckland Sydney* Wellington X Rabobank International

  5. Commodity price risk management solutions Tools in the Toolbox Rabobank International

  6. Cotton price management tools Fixed Price –Futs / Swaps Price paid World market price • Requires credit. • Can be done for African price of cotton with Rabobank Cotton Swaps, limited liquidity • NY hedges liquid with some basis risk Rabobank International

  7. Cotton price management tools Price Insurance - Options Price paid World market price • Does not require credit. • World Bank / ITF CRM programme teaches and explains and help link with Price Providers Rabobank International

  8. Proposal for a quick fix which is effective Price Insurance – 2 Options Price paid ITF – Opportunistic Option EU – Catastrophe Option World market price • Does not require credit. • Fits with World Bank / ITF CRM programme Rabobank International

  9. Biographies Nigel Scott Executive Director, Global Financial Markets Nigel has been Global Head Commodity Price Risk Management and Structured Commodity Finance (OECD countries), two global teams engaged in the trading of physical and derivative commodity (Cotton, sugar, coffee, cocoa, etc) transactions and asset backed finance structures, for Rabobank International since 2001. He has worked for Rabobank International since 2000. Nigel started working for Cargill in Grain, NGFI and Vegetable Oil as a Merchant (1991-1993) under Cargill’s Commercial Management Trainee scheme, working as a grain and NGFI commodity trader. He then became a Cotton Trader for Ralli Brothers and Coney, UK, and Hohenberg Brothers (1993-1998). Nigel then worked in Cargill’s Financial markets Platform as a Senior Structurer for Cargill Investor Services in 1998, and started a number of Soft Commodity Swaps derivatives markets, including cotton swaps. Nigel frequently acts as an Arbitrator as a member of the Liverpool Cotton Association, is a Director of the Liverpool Cotton Association and is a member of FOSFA and an arbitrator for the L.C.A.S. Nigel obtained a BSC (Hons) from Imperial College, London, in Microbiology. Rabobank International

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