Title The Specialty Coffee Trading Company (TSCT) : future and option contracts / authored by Mauricio Jenkins (Department of Finance, INCAE Business School, Walter Kissling Gam Campus, Alajuela, Costa Rica), and Francisco Barbosa (Department of Food Science, Aarhus University, Aarhus, Denmark)

Published Bingley, U.K. : Emerald Publishing Limited, 2020 ©2020

Online access available from: Emerald Emerging Markets    View Resource Record

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Description 1 online resource (7 pages) : 18 illustrations ; cm Series Emerald emerging markets case studies, 2045-0621 ; volume 10, issue 2 Notes The main pedagogical objectives of the case are: illustrate how Latin American companies dedicated to the production and harvesting of commodities can be vertically integrated to gain a larger share of the value created throughout the production chain. Understand how futures and options contracts in commodities can be used to hedge price risk on long and short positions in the underlying products. Understand how option contracts add value by hedging risk in those contexts where the counterparty has optionality. Discuss the implications of Fair Trade for commodity traders and producers In the case, Hernan Arosamena, CFO of The Specialty Coffee Trading Co. (TSCT), faces the challenge of designing an effective strategy to hedge the price risk caused by the increasing demand of the so-called Fair Trade coffee. Hernan Arosamena decides to review how the company has typically managed the price risk in its business transactions using future contracts to then incorporate the additional elements that trading Fair Trade coffee may entail. The typical price risk hedging strategy involves the use of coffee future contracts in long and short positions to ensure that the company obtains the desired margin in its coffee trading negotiations. To hedge the exposure to the risk of fluctuations in the price of coffee when the company sells Fair Trade coffee requires the additional use of put options The case is appropriate for students enrolled in courses or specialization programs at both the undergraduate and graduate levels Teaching notes are available for educators only Bibliography Includes bibliographical references and index Notes Print version record Subject Coffee industry -- Capital investments -- Latin America Coffee industry -- Risk management -- Latin America Vertical integration -- Latin America Hedging (Finance) Business & Economics -- Industries -- Healthcare. Food manufacturing & related industries. Form Electronic book Author Barbosa, Francisco, author.

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