Nalbandian N. Management in International Trade in Agricultural Commodities.

The thesis is devoted to the study of theoretical and methodological principles as well as practically oriented approaches with regard to market risks management in international trade in agricultural commodities. The hallmarks of uncertainty and its impact on a decision-making process of economic agents active in international trade are highlighted. In particular, uncertainty is presented from the probability theory and the theory of statistics points of view. The concept of risk as a type of uncertainty that can be quantified is considered, which, in turn, improves theoretical and practical provisions for ensuring sustainable growth of an enterprise. The importance of market risks management that enables to create an effective mechanism for minimizing adverse effects caused by unfortunate events under uncertainty is emphasized. The thesis pays special attention to the definition of hedging as one of the most effective methods to manage price risk in the context of international trade and finance. The role of the basis is viewed through the lens of its usage by food industry to value an agricultural commodity as the basis functionally connects futures markets, where all economic forces are reflected in the price of an agricultural commodity, with local cash markets that employ prices set in futures markets as a benchmark. With employing up-to-date statistics from the database of a reputable media agency Thomson Reuters Eikon (Refinitiv Eikon), the research has been conducted with regard to the correlation between Crude Soybean Oil market represented by FOB Argentina quotes and Crude Sunflower Oil market represented by FOB Black Sea quotes, which both are the most liquid cash markets of the respective agricultural commodities in the world. When analyzing fluctuations of Argentinian Crude Soybean Oil basis and Black Sea Crude Sunflower Oil prices, the Pearson correlation coefficient of 0.703681283 has been calculated which proves the existence of a medium positive correlation between prices of two markets. Relevance of using the main price risk management strategies by exporters in international markets of agricultural commodities with the aim of hedging open positions as well as generating the stable cash flow is identified.