Introduction to the Commodity Markets

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This half-day course provides a fundamental overview of the commodity markets. Introducing the key features of commodities and major commodity sub-classes with their key price drivers. Illustrative examples demonstrating the forward curve backwardation and contango backed up with the rationale explaining the curve evolution. Explanation of how investors can gain commodity exposures using both the physical and derivatives markets.

Key Learning Objectives

• Define commodities and describe their key features and characteristics
• Awareness of the specific terminology used in the commodity markets
• Identify the various types of commodities with primary focus on energy and precious metals
• Differentiate between physical and futures markets
• Discuss the price drivers of the different types of commodities
• Identify the risks associated with commodities
• Explain the pricing concepts and provide an understanding of the concepts of Backwardation and Contango

Start: 9:30

The commodities ecosystem

• Rationale for investing in commodities and how they fit into the investment portfolio
• Soft vs. hard commodities and the 4 broad categories – agriculture, energy, livestock and metals
• How commodities differ from traditional asset classes

The energy markets

• Review of other investable energy markets
• Crude, natural gas and gasoline
• Using crude oil futures to go long or short oil exposure

Precious metals investing

• Market fundamentals and price drivers
• Gold and silver as an investment

Coffee Break: 10:50 - 11:10

Commodity index price determinants and return dynamics

• The importance of liquid spot indices
• How they are used and how the returns are calculated
• Understanding the return from indices
• Spot return vs. excess return and the roll yield

Short term price behaviour of spot and forward markets

• The influence of inventory levels, transportation and storage costs on spot and forward prices
• The concept of the Convenience Yield
• The spot-forward relationship and the shape of the forward curve
• Explanation of Backwardation and Contango
• How does seasonality effect pricing and returns?

End: 12:30

This half day course is relevant to those who are new to the investment industry or those looking to improve their knowledge and understanding of the commodity markets.

• Investment professionals, investment administration and operations
• Client services and sales and marketing
• Risk management, legal, audit and compliance
• Finance and accounting
• HR and learning and development
• IT and software developers

Russell Hammerson

Russell Hammerson is an experienced banker working with structured products and exotic options over 15 years.

Russell started his career in the fixed income trading division at Chase Manhattan in 1986. After having graduated from the Chase nine-month advanced financial risk analysis programme, he was seconded to the Chase insurance banking division for a year. Taking his insurance expertise with him, he later moved to Citibank to work in the financial engineering division, structuring fixed income and equity products for institutional investors.

From Citibank, Russell moved to Bear Stearns to help set up the newly established equity derivatives group as associate director responsible for marketing and structuring of European products prior to becoming head of structured products at Commerzbank.

Before moving into the technical training arena, Russell ran the structured product group at Banque Nationale de Paris followed by Bankgesellschaft Berlin, London, in a similar role as head of engineered products and international new issues and director of the London Management Committee.

Russell has been training all areas of capital markets since 2001. At BG Consulting (now trading as ZISHI Cornerstone), he specialises in structured products, equity and credit derivatives and exotic options.

IA Member £395.00 +VAT
Non-Member £545.00 +VAT

Pay using a credit card online, or if you wish to be invoiced please email your full details to: Training@theia.org

PLEASE NOTE: Full payment for the course must be made prior to the course commencement date.

• Any cancellation must be made in writing.
• For all cancellation received 15-30 days prior to the course start date, 50% of the course fee is still payable.
• No refund is given for a cancellation made 14 days or less prior to the commencement of a course.
• Transferring from one course to another is treated as a cancellation. You can substitute one delegate for another at no additional cost. In this instance, please give two business days’ notice.

Hybrid Training Courses:

We will continue to monitor and follow government guidance regarding coronavirus (Covid-19) to ensure the safety of our team and our members. Please be advised some training courses could change from hybrid delivery (being held in-person and virtually) to solely virtual delivery, should government guidance require.