Les marchés dérivés de produits agricoles. Présentation et perspectives de développement dans l'Union européenne

Abstract

Derivative Contracts for Agricultural Commodities. Presentation and Perspectives of Development within the European Union The 1992 reform of the Common Agricultural Policy, the GATT signature in 1994 and the inpending integration of the Eastern Countries bring decisive signals on public market regulations. The first consequence is a definite comeback of consumer's demand on the whole food chain. The second is the increasing price volatility on a short and long term basis. These volatilities bring financial risks to the chain members from the producers to the commodity users. As a consequence, risk management techniques are under the professional's scrutiny. Eventhough the basic techniques of risk pooling and risk spreading through diversification are well-known in theory, their application at market level raises quite a lot of questions. Furthermore, a considerable innovation in diversified and customerized contracts has brought attention to many professionals and academics for potential use and consequences. The article analyses the potential development of private risk management tools as traded on OTC or centralized commodities markets in Europe. These tools are currently heading a new industry on financial markets. What are the perspectives for agricultural commodity markets ? The first part of the paper is a rapid description and essay on the classification for the derivatives which are expanding rapidly in terms of customerized contracts. Not only have the contracts been more finely designed, they are also expanding in volume. The second part develops the main theoretical problems : market efficiency with respect to information and subject to the micro-structure of the market place ; spot and forward price relationships for innovative contracts ; optimal hedging using a dynamic approach or asymétrie price risk management. The potential of development of derivatives contracts used as risk management techniques is presented in part three. As a conclusion, the paper indicates that the partial deregulation of European commodity markets brings a real incentive for risk management at each level of the marketing chain, from the producers to the food industry which transform volatile commodity prices into a fixed price for food products as described in a price range. The total amount of risk management demand will divide itself into mutualized techniques and individual portfolio techniques. Therefore, the absolute value of derivative contracts will increase in the coming years a well as its relative market share. The limit of this analysis is the quantitative evaluation of innovative products which depends on their diffusion rate within the industry. This is a long process where the future equilibrium of techniques is difficult to forecast.