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BNZ Introduces Hedging Solutions for Energy

Bank of New Zealand Introduces Hedging Solutions for Energy, Base Metals, Agricultural Commodities

Businesses now have a way of combating commodity price fluctuations thanks to Bank of New Zealand’s newly-launched Commodities Price Risk Management (Hedging) Solutions.

The bank’s new products are hedging tools designed to reduce to an acceptable level the risks associated with fluctuations in the price of energy, base metals, and agricultural commodities. Specifically, these are products such as diesel, jet fuel, fuel oil, natural gas, heating oil, aluminium, copper, wheat, corn, sugar, and wool.

“Price fluctuations can cause huge dents in profitability for businesses that consume large amounts of these commodities,” says Wayne Jolly, head of risk management services in Bank of New Zealand’s markets division.

“For example, diesel prices could affect trucking and fleet operators, aluminium prices could impact yacht and can manufacturers, and similarly, wheat and sugar prices affect baking and beverages manufacturers.

“Hedging commodity prices will allow businesses to fix their costs, and plan and budget with greater accuracy. It also reduces the stress of having to consistently monitor price movements on overseas commodity exchanges.

“We provide up-to-date market intelligence and strategy reports to help clients tailor the most effective hedging decisions in relation to their business objectives,” says Mr Jolly.

Bank of New Zealand can also arrange weather derivatives for customers with significant exposure to weather risks.

The types of hedging contracts currently available through Bank of New Zealand are swaps (fixed price contracts), floors (guaranteed minimum price contracts), and caps (guaranteed maximum price contracts).


For more information on commodity price risk management, please contact Bank of New Zealand risk management solutions sales specialists on Auckland (0800 658 882), Wellington (0800 652 619), or Christchurch (0800 854 854).

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