Question 1

a) Discuss five roles of warehousing in commodity trade.

b) Explain any two functions of Warehouse receipts (WRs)

c) You are the manager of XYZ warehouse. You receive a packing order for 400 cases of item #103. The case dimensions for this item are 12 L x 15 W x 10 H. The maximum case stacking height for this product is 8 cases.

i. What is the total number of cases you can fit on one layer of a 48 x 40 pallet?

ii. If you stack the cases 8 high, how many total cases can you load on one pallet?

iii. How many pallets will you need for this order in the warehouse?

Question two

a) Discuss what commodity finance is and indicate how it is different from traditional finance.

b) Discuss four funding structures used by banks to facilitate trade across the commodity value chain.

Question three

a) What are commodity derivatives?

b) Identify and discuss four key roles of derivatives in commodities trade

c) A factory uses 1000 barrels per year and faces the volatility of spot prices in the open market. The factory wants to bring some stability for better planning. The factory enters into a swap contract by agreeing to buy crude oil at 80/barrel at 4000 barrels for the next few years. This transaction is based on a financial settlement so the factory receives or pay the differences between the spot price and the swap contract. What happens if the spot price;

i. rises to 100/ barrel

ii. reduces to 60/ barrel

Question four

a) Discuss the concept of commodity risk in commodities trade

b) Discuss four types of commodity risk.

c) What are the effects of commodity price fluctuations to both the producer and the consumers of commodities

Question five

Give a detailed description of Ghanas commodity market