Study On Hedging Of Sugar Enterprises In China

Sugar is an international commodity with more fluctuating price,and its volatility is three to six times that of soybean,cotton and grain.The ups and downs of sugar prices make sugar farmers,sugar manufacturers,sugar traders and processing enterprises taking sugar as the main raw material bear huge market risks.For the sugar industry,sugar in the sugar concentration within the period of harvest,sugar but in annual sales,enterprises need to raise a lot of money to pay for a period of sugar in sugar,also produced sugar most not immediately sold,only piled up in the warehouse inventory form,enterprises occupy a lot of money,sugar enterprises are facing enormous market risk.In order to avoid the adverse effects of sugar price changes,China's sugar enterprises can hedge through sugar futures and sugar options,transfer price risk,lock profits in advance,stabilize business performance,and ensure stable and sustainable development of enterprises.This article is divided into five chapters.The first chapter is the introduction of the research background,research significance,the domestic and foreign research carried out;the second chapter is an overview of the theory of hedging,futures hedging theory and option hedging theory are introduced;the third chapter is the development status of China's sugar industry of our country,the sugar industry is briefly analyzed;the fourth chapter introduces the A sugar company as the case of China's sugar enterprises hedging operation,introduces futures hedging and hedgingoperation;the fifth chapter is the conclusion of the findings of this research are summarized.The main conclusions of this paper: Sugar futures and white sugar options provide a good risk management tool for sugar enterprises in China.Sugar enterprises can hedge by white sugar futures and white sugar options,transfer price risks,and lock profits ahead of time.China's sugar enterprises should strengthen the business learning and internal control system construction for sugar futures and sugar options hedging,train specialized talents,and do a fundamental analysis of the sugar market,and at the same time perform risk management in hedging operations.Through hedging,the company will improve its anti-risk capabilities,stabilize operating performance,and ensure the smooth and sustainable development of the company.Before the hedging is carried out,China's sugar enterprises should do a good job of the early system construction,and formulate the internal control and risk management system of the hedging operation in detail.The system of the hedging business,the range of the hedging business,the scope of the hedging business,the approval authority,the internal audit process,the responsible department and the responsible person,the information isolation measures,The internal risk reporting system and risk handling procedures are clearly defined to ensure the smooth implementation of the hedging business and the effective control of the risk formation.In view of the possible risks encountered during the hedging operation,the enterprise should formulate corresponding measures to solve the risk properly in the event of the occurrence of the risk.The enterprise should always pay attention to the macroeconomic situation at home and abroad and the development trend of the sugar industry,so as to predict the change trend of the sugar price more accurately,and better provide the decision basis for the enterprise hedging operation.In order to avoid the risk of sugar price,Chinese sugar enterprises can choose different hedging strategies according to different market quotations and their own needs:1.When sugar companies expect the spot price of sugar to fall sharply in the future,they can avoid the risk of falling spot prices of sugar by selling white sugarfutures or buying white sugar put options.2.When sugar companies expect that the spot price of sugar will be stable in the future and will not rise sharply,they can increase their sales income by selling white sugar call options.3.When sugar makers need to establish a hedging portfolio at a lower cost and do not need unanticipated profit,they can buy spot-value put options and sell out-value call options to prevent the spot price of sugar from falling sharply,at the same time,retaining certain profit opportunities brought about by rising prices.