A bit more about the commodity suite and the link with Treasury

The commodity suite has got your attention! That’s why we thought it would be a good idea to give you a recap of the benefits. 

The commodity suite feeds Trinity with daily cash flow forecast information, resulting from commodity contracts. This information can help to further mitigate liquidity- and FX risk.

This suite, developed by our partner KYOS, allows the user to capture all commodity contracts such as:

  • base metals, oil-complex (e.g. crude, diesel, jet fuel, gasoil, olefins and aromatics)
  • energy (power, gas, coal, carbon and steam)
  • agri-commodities (e.g. sugar, soybean, corn, wheat)

The buy/sell contracts of these products can be captured respecting their market specific features.

The user can also create a commodity which comprises of a combination of underlying commodities in different weights. A good example is the commodity ‘beer’ (a brewery has a portfolio of underlying commodities like wheat, malt, aluminium and natural gas).

Per (underlying) commodity, the historical prices can be uploaded which are used for MtM calculations and to perform sophisticated risk metrics such as VaR and CFaR.

On the one hand, the solution is used by the procurement team and/or trading departments to manage the physical commodity positions. On the other hand, finance and treasury make use of the same data as the system provides multiple teams with the following insights:

  • What should be sourced?
  • What are the financial exposures resulting from physical contracts?
  • Are these exposures in line with defined hedging strategies (or under/over hedged)?
  • What would have been the costs if another purchasing strategy would have been chosen in the past?
  • Value-at-Risk report: What can happen with my MtM during the next 1, 5 or 10 days or what can happen with my costs if I wait with hedging?
  • Cashflow-at-Risk report: what are the expected costs for the following years given a 95% certainty level.
  • Stress testing, with market prices being shifted upwards or downwards, in order to see the impact on the cashflows.

Most of the above questions are key information for the board and cannot be answered with a typical ERP solution.

Close Menu