Yihai Kerry Arowana Company Commodity Futures Hedging Case Study

The risk of price fluctuation is a risk that must be borne in the business activities of enterprises,and the negative impact of price fluctuations can easily make the company’s finances fall into trouble.The emergence of futures hedging tools provides a new way for enterprises to curb price fluctuations.The irreversibility of the trend of economic globalization has intensified the fluctuation of currency and commodity prices,which has affected the development of the real economy to a certain extent.Therefore,in order to lock in profits and reduce business risks,more companies choose to use futures hedging tools.However,the development of China’s futures market is relatively late,and the hedging business of most enterprises has certain problems.As the leader of grain and oil enterprises,Yihai Kerry Arowana Company was profitable in commodity futures hedging from 2017 to 2019 and a loss in commodity futures hedging from 2020 to 2021.In order to study the problems existing in Yihai Kerry Arowana Company’s participation in the commodity futures market and bring confidence to grain and oil enterprises to participate in the futures market,this paper selects Yihai Kerry Arowana Company as a case study to analyze its commodity futures hedging situation from 2017 to2021,and at the same time selects a variety of methods to analyze the hedging effect of commodity futures of Yihai Kerry Arowana Company.In the analysis of the motivation of Yihai Kerry Arowana Company,it was found that the hedging of Yihai Kerry Arowana Company was mainly attributed to three aspects: locking in the procurement cost of enterprises,improving the efficiency of capital use,and obtaining additional investment income.Yihai Kerry Arowana Company mainly faces the risk of raw material price fluctuation,using the standard deviation of individual stock yield,βvalue and Z scoring method to analyze the hedging risk avoidance effect of Yihai Kerry Arowana Company,and finds that the rise in raw material prices increases the risk of enterprises,and the risk avoidance effect of Yihai Kerry Arowana Company is general.This paper also adopts the comparative analysis method,selects COFCO Group and Yihai Kerry Arowana Company for comparative analysis,and finds that participating in hedging makes the fluctuation of Yihai Kerry Arowana Company’s operating profit margin to a certain extent,the management ability of cash flow is average,and the overall effect still has room for improvement.Through analysis,it is found that Yihai Kerry Arowana Company’s hedging has problems such as basis risk control ability that needs to be improved,imperfect internal control system,and lack of futures professional talents.Finally,combined with relevant theoretical knowledge,the following suggestions are put forward for the problems existing in commodity futures hedging of Yihai Kerry Arowana Company: strengthen the concept of futures,improve the level of basis risk management,reasonably arrange the spot ratio of futures,formulate a variety of hedging schemes,adjust the organizational structure of personnel,improve the internal control system,explore compound talents,actively introduce futures professionals,and hope to help Yihai Kerry Arowana Company achieve better development of commodity futures hedging.