Reference no: EM133115271
Xplore Palm Oil is the best the best producer of palm oil in Malaysia and its export almost RM10 billion in last year. The CEO of the firm is worries with the new variant of Omicron and it will affect to the economy again. Therefore, he contacted you as a financial advisor how to protect his company from the risk arising due to Covid-19. In March 2022, the company will produce 50,000 tonnes of palm oil and will exported to US and Europe. From the current news, there are high case of Omicron found in Europe. If government Malaysia blocked all the shipping of their exports to related country, this will damage their palm oil. Today (January 2022), the physical oil price is RM3440 and the price in the spot month is RM3570, one-month price is RM3300, two-months price is RM3170 and three-months price is RM2930 for the price in the futures market. The current cost of storage is RM11 per tonne per month, the interest rate is 3.8%, dividend yield is 5.5%.
You assume upon maturity, the price in the cash market is reducing by 5% and the price in the futures market for the one month price is reduce by RM78, two-months price is reducing by RM90 and three-months price is reducing by RM112.
Required:
a. What are the factors affected to palm oil industry and make a trader to enter the derivatives market to protect themselves?
b. As a financial advisor, what is the best strategy for Xplore that you may suggest to reduce the losses from the risk arising? Why?
|
Assess the company cash needs
: The company sells 90% of its products on credit, and 10% are cash sales. The credit sales are collected as follows: 60% in the following month, 20% two months l
|
|
Case study-resnik gold mining
: John Resnik, the owner of Resnik Gold Mining, is evaluating a new gold mine in South Dakota. Mike Golder, the company's geologist, has just finished his analysi
|
|
You would take to ensure compliance
: What are at least two ways that you would take to ensure compliance? Explain why you chose the resources you did and their value to small businesses.
|
|
What the budgeted number of direct labor hours for the year
: The predetermined overhead rate for the year was $18.56 per direct labor hour. What the budgeted number of direct labor hours for the year
|
|
What are the factors affected to palm oil industry
: a. What are the factors affected to palm oil industry and make a trader to enter the derivatives market to protect themselves?
|
|
Signs of organizational culture
: The text presents five signs of organizational culture: mission statement, stories and language, physical layout, rules and policies, and rituals.
|
|
Calculate the balance in work in process as of june
: During June, Jobs 39 and 40 were completed; Job 39 was sold at 130 percent of cost. Calculate the balance in Work in Process as of June 30
|
|
Differences between salam and istisna
: One of the fundamental conditions of sale contracts in Islamic commercial jurisprudence is that the subject matter needs to be in existence.
|
|
Non-banking system and a banking system
: What is the difference between a non-banking system and a bakning system? How are they valued differently? Regulated differently?
|