REASEARCH AND REPORT CTRM for Agricultural and Soft Commodities Commodity Technology Advisory LLC Houston and Prague CTRM for Ags & Softs © Commodity Technology Advisory LLC, 2016, All Right Reserved 1 CTRM for Ags & Softs Contents Introduction and Scope of Research ....................................................................................................................................... 5 Definitions and Scope ............................................................................................................................................................. 6 Commodity Trading and Risk Management ........................................................................................................................ 7 Commodity Management ................................................................................................................................................... 8 Solutions Matrix .................................................................................................................................................................... 10 CTRM Market Growth and Outlook in Ags & softs ............................................................................................................... 10 CTRM Versus CM ................................................................................................................................................................... 11 It Is All About the Commodity ............................................................................................................................................... 11 Summary ............................................................................................................................................................................... 13 Appendix 1 - Derivatives and Exchange Traded Products .................................................................................................... 14 Appendix 2 - Commodities and Unique Supply Chains - Introduction.................................................................................. 18 Complex Agricultural Commodities ...................................................................................................................................... 19 Cotton ................................................................................................................................................................................... 19 Overview............................................................................................................................................................................ 19 Cotton Trading ................................................................................................................................................................... 19 The Cotton Supply Chain ................................................................................................................................................... 20 Cotton Quality Attributes per the USDA ........................................................................................................................... 21 Cocoa ..................................................................................................................................................................................... 26 Overview............................................................................................................................................................................ 27 Cocoa Production .............................................................................................................................................................. 27 Cocoa Trading .................................................................................................................................................................... 28 Sugar ..................................................................................................................................................................................... 30 Overview............................................................................................................................................................................ 31 Sugar Production ............................................................................................................................................................... 32 Sugar Trading ..................................................................................................................................................................... 33 Coffee .................................................................................................................................................................................... 35 Overview............................................................................................................................................................................ 35 Coffee Production ............................................................................................................................................................. 35 Coffee Trading ................................................................................................................................................................... 36 Palm Oil ................................................................................................................................................................................. 39 Overview............................................................................................................................................................................ 39 © Commodity Technology Advisory LLC, 2016, All Right Reserved 2 CTRM for Ags & Softs Palm Oil Production ........................................................................................................................................................... 39 Introduction to Grains, Beans and Seeds .............................................................................................................................. 41 Overview............................................................................................................................................................................ 41 CTRM Development in These Markets .............................................................................................................................. 42 Critical Issues in Trading Grains, Beans and Oil Seeds ...................................................................................................... 43 Corn ....................................................................................................................................................................................... 44 Overview............................................................................................................................................................................ 44 Production ......................................................................................................................................................................... 44 Corn Trading ...................................................................................................................................................................... 45 Wheat .................................................................................................................................................................................... 46 Overview............................................................................................................................................................................ 46 Wheat Production ............................................................................................................................................................. 46 Wheat Trading ................................................................................................................................................................... 46 Rice ........................................................................................................................................................................................ 48 Overview............................................................................................................................................................................ 48 Rice Production ................................................................................................................................................................. 48 Rice Trading ....................................................................................................................................................................... 49 Soy Beans .............................................................................................................................................................................. 51 Overview............................................................................................................................................................................ 51 Soy Bean Production ......................................................................................................................................................... 51 Soy Bean Trading ..............................................................................................................................................................