Using weather futures options to hedge the volume risks of rice crops in Iraq For the period (2006-2020)
DOI:
https://doi.org/10.36322/jksc.v1i72.15845Keywords:
options, futures, weather derivatives, hedging, volumetric risksAbstract
The impact of the weather on commercial activities seems enormous and dangerous, and it varies depending on the commercial activity, location, size and level of change occurring in climate variables in the agricultural sector through the volume of basic commodities produced at the country level, not to mention its consequential impact on the type and quality of these commodities and thus their prices, so it has become necessary Searching for a tool that contributes, partially or completely, to addressing this problem. Weather derivatives were the proposed method, as they are innovative, modern, and extremely wonderful tools for transforming weather variables into a commodity that can be traded in the markets and between buyers and sellers.
The research attempts to propose and select the most successful strategies that can be adopted to eliminate or reduce the effect of volumetric risk for basic commodities by preparing possible financial engineering according to precise mathematical scientific rules and procedures. Rainfall level data was collected for the countries studied (Iraq and Thailand) for the period (2006-2020), using a number of financial, mathematical and statistical methods.
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