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  • Ways to fix PTBF contracts

     
     
    Pricing order. The exporter has covered (bought in) the physicals they sold, or they simply decide they like the current price on the exchange. They ask the buyer to execute the futures (the hedge) at the current price. Usually, the buyer then sells the futures and so fixes the price for the physicals without the exporter needing to be involved on the exchange at all. But the buyer is not obliged to trade the futures: they can also fix the price for the physicals by simply accepting the futures price that ruled at the time the seller asked for fixation.

    Against actuals - AA. Many roasters fix prices on buyer's call contracts by trading the futures against actuals through a pre-arranged deal on the exchange, usually but not necessarily at a price within the day's range. This avoids the complexities of physical delivery against futures contracts and is easily done when the roaster's counterpart is an importer or a trade house. Exporters can accommodate this only if they have access to a futures trading account.

    Give up. This is another way to fix prices on buyer's call contracts with roasters, and is also often used to fix PTBF contracts between dealers. It differs from AA in that, after executing the futures order, the buyer (or seller) instructs their broker to give the deal up to the other party. The futures are therefore actually transferred between accounts when the physicals are fixed.
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