The following is a guide to some of the terms you’ll hear around sugar pricing and marketing.
Free on board (FOB)
ICE 11 (Sugar No. 11 futures)
ICE 16 (Sugar No. 16 futures)
On-supply agreement (OSA)
If the option is a call, when the underlying asset hits the strike price it can be bought. If the option is a put, hitting the strike price means the underlying asset can be sold. In order for an option to be exercised, it must reach its strike price before its expiration date. The more the asset price moves beyond the strike price, the more profit is derived from the option.
When the underlying asset in an option matches its strike price, the option is known as being ‘at the money’. When it exceeds the strike price, it is ‘in the money’.
Commodity swaps involve the exchange of a floating commodity price for a set price over an agreed-upon period.
In a currency swap, the parties exchange interest and principal payments on debt denominated in different currencies.