I asked this before and didn't include the case study

this is a question that is a part of my case study: Considerations of margin account (Margin requirements are provided within the contract specifications obtained from Bloomberg). Furthermore, your analysis should identify any instances whereby margin calls would be executed on Cairns Sugarcane.

What would this include? Do you think this requires me to do calculations or just identify the instances? I'm just really confused how to go about this and where to start, what information do I need? If this question is missing information can you let me know what it is?

The Case Study: Cairns Sugarcane Limited

Assume it is 30 May 2020. You, as the chief financial officer at Cairns Sugarcane Limited, need to give a presentation for the upcoming board of directors meeting. Your team is responsible for developing strategies to manage (hedge) the company's exposure to sugar prices for the next few months. Sugar is Australia's second largest export crop with a total annual revenue of almost $2 billion, which Queensland produces 95% of sugar. And sugar prices had always played a significant role in Cairns Sugarcane's profit, but management had not considered the risk important enough to merit action. Over the past 12 months, sugar prices were volatile. Meanwhile, Cairns Sugarcane has recorded a series of losses over the last five years. These financial results were largely driven by a decrease in sugar revenue due to lower raw sugar prices and reduced cane tonnages processed through the mills. Appendix 1 presents a financial snapshot for Cairns Sugarcane Limited for the past five years. For the last two years, management has been seeking a way to recapitalize the business, paving the way to future growth as Cairns is a great place to make sugar and supply Asia through local ports. So, the financial team you lead is going to support and assist the management to improve financial performance. Cairns Sugarcane's exposure to sugar prices during the next few months would be substantial. However, this exposure could be offset with the use of raw sugar futures contracts that are traded on the Intercontinental Exchange. The size of the tranche is measured as tonnes of sugar (tonne or ton is a unit mass used in the United Kingdom as part of the Imperial System. 1 long ton = 2240 pounds = 1,016.047 kg). The proposal you are going to present includes a strategy of taking some positions (long or short) in ICE #16 futures contracts in order to manage the firm's exposure to spot price volatility for raw sugar up until the due delivery date of a sugar tranche on 23/07/2020. Raw sugar is traded internationally on the basis of US dollar prices. Meanwhile, you will also consider the changes of Australian dollar over the next few months, which would therefore increase or decrease 6 | P a g e the value of the consigned sugar in Australian dollar terms. Accordingly, you decide to simultaneously manage foreign currency risk over the hedging period by using foreign currency futures to hedge the currency risk. Australian dollar futures are traded on CME.

https://www.theice.com/products/914/Sugar-No-16-Futures https://www.cmegroup.com/trading/fx/g10/australiandollar_contract_specifications.html Another useful resource regarding ICE futures contracts is available at the following online address: https://www.theice.com/publicdocs/ICE_Sugar_Brochure.pdf Daily settlement (or last) price of both contracts for the period from 18/09/2019 to 23/07/2020 from Bloomberg have also been downloaded by your team members. (Refer to the Excel file for raw data downloaded). You may assume the nearest futures price to be the current spot price (i.e. 23/10/2019). This is the price at which you may acquire a position in both futures contract. Since the spot price and the futures price converge at the expiry date, this implies the hedge will remain in place until 23/07/2020.

AUDUSD Currency Futures Contract Description CANCE HELP SEARCNEWS QUOTE QUOTE MSG MENU PRINT PG BAC PG FW > | AUDUSD Crncy Fut Sep20 Curncy . | DES . | Related Functions Menu Message ADUO 71.07 71.07 / 71.09 1x3 As of Close 24 Juld Vol 90023 OpenInt 113256 ADUO COMB Curncy Page 1/2 Security Description 1) Contract Information 2) Linked Instruments ADUO Curncy AUDUSD Crncy Fut Sep20 CME-Chicago Mercantile Exchange 3) Notes ** Product specifications link below * * Australian Dollar Future 4) Contracts | CT > Jan-F Feb-G Mar-H Apr-J May-K Jun-M Jul-N Aug-Q Sep-U Oct-V Nov-X Dec-Z Contract Specifications Trading Hours 5) Price Chart | GP > Underlying . Exchange O Local O Intraday . History . Curve Contract Size 100,000 AUD Electronic 08:00 - 07:00 + Track Q Zoom 71.60 Value of 1.0 pt $ 1,000 Tick Size 0.01 -71.20 Tick Value $ 10 6) Related Dates | EXS > Price 71.07 cents/AUD First Trade Tue 09/15/2015 -70.80 Contract Value $ 71,070 Last Trade Mor 09/14/2020 16:09 Jul 2020 00:00 16:09 Ju1 2020 00:00 Last Time 07/24/20 First Notice Mon 09/14/2020 Prc Chg 1D -0.02/-0.028% Exch Symbol 6A First Delivery Wed 09/16/2020 Lifetime High 81.14 FIGI BBGO09YQCQ77 Last Delivery Wed 09/16/2020 Lifetime Low 55.20 7) Holidays | CDR CE > Margin Requirements Daily Price Limits Speculator Hedger Up Limit 75.09 Initial 1,980 1,800 Down Limit 67.09 Secondary 1,800 1,800 300) Edit Panel 301) Expand Panel 370 ITA 14:18 ITAR-TASS: Russian chief infectious diseases specialist expects no 369 APW 14:18 With No New Law to Curb Drug Costs, Trump Tries Own Changes 368 NS3 14:18 Sunday Mirror: The Queen was 'blindsided and hurt' by Meghan and H 367 NPW 14:18 Kepler's homers spark Twins to rout of White Sox Notes: Initial: The minimum amount of money or marginable securities a speculator (hedger) must post when buying or selling the futures contract. Secondary: The minimum balance required in a speculator (hedger)'s margin account, below which a margin call will be issued. Also known as maintenance requirements.Sugar No. 16 Futures Contract Description 4-BLOOMBERG Tabs are here! = Options X CANCE HELP SEARC NEWS QUOTE QUOTE MSG MENU PRINT PG BAC PG FW > SUGAR #16 (DOMST) Nov20 Comdty . | DES . | Related Functions Menu Message SFX0 $27.00 26.71 / 27.20 -- X -- As of Close 24 Juld Vol 38 OpenInt 2646 SFXO Comdty Page 1/2 Security Description 1) Contract Information 2) Linked Instruments SFXO Comdty SUGAR #16 (DOMST) Nov20 NYB-ICE Futures US Softs 3) Notes ** Product specifications link below * * The Sugar No. 16 contract serves the hedging needs of U.S. sugar producers, end users and merchants. The contract prices physical delivery of US-grown (or foreign origin with duty paid by 4) Contracts | CT > Jan-F Feb-G Mar-H Apr-J May-K Jun-M Jul-N Aug-Q Sep-U Oct-V Nov-X Dec-Z Contract Specifications Trading Hours 5) Price Chart | GP > Contract Size 112,000 lbs. . Exchange O Local O Intraday . History . Curve Value of 1.0 pt $ 1,120 23:00 - 03:00 + Track . Zoom Tick Size 0.01 .........27.00 Tick Value $ 11.2 26.90 Price 27.00 USd/lb. 6) Related Dates | EXS > 26.80 Contract Value $ 30,240 First Trade Mon 12/03/2018 26.70 Last Time 07/24/20 Last Trade Thu 10/08/2020 00:00 02:00 23 Jul 2020 p0:00 02:00 24 Jul 2020 Exch Symbol SF First Notice Fri 10/09/2020 Prc Chg 1D 0/0% FIGI BBGOOM6JSC88 First Delivery Sun 11/01/2020 Lifetime High 27.61 Last Delivery Mon 11/30/2020 Lifetime Low 25.77 7) Holidays | CDR FN > Margin Requirements Daily Price Limits Speculator Hedger Up Limit 75.00 Initial 540.36 491.236 Down Limit 1.00 Secondary 491.236 491.236 Suggested Functions GIP Chart intraday price movements CMBQ See commodity pricing & production data