Modification History
Not Applicable
Unit Descriptor
Unit descriptor |
This unit covers the process of managing price risk through trading strategy and defines the standard required to: determine cost of production; assess risk to financial returns through market or currency movements; analyse trends and evaluate forecasts; monitor and assess price movements; implement a trading strategy for price risk management. |
Application of the Unit
Application of the unit |
This unit applies to the ability to determine cost of production, assess risk, analyse trends and evaluate forecasts, and monitor and assess price movements. |
Licensing/Regulatory Information
Not Applicable
Pre-Requisites
Prerequisite units |
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Employability Skills Information
Employability skills |
This unit contains employability skills. |
Elements and Performance Criteria Pre-Content
Not Applicable
Elements and Performance Criteria
ELEMENT |
PERFORMANCE CRITERIA |
1. Conduct market research |
1.1. Estimates of supply and demand are collated and evaluated. 1.2. Past trends are analysed and possible future scenarios assessed. 1.3. Own products are related to market indicators. |
2. Determine price required |
2.1. Cost of production is calculated and break-even price is determined. 2.2. Margins for profit and risk are determined. 2.3. Forward price objectives are set to meet cost of production plus profit required. 2.4. Personal attitude to risk is evaluated. |
3. Develop sales plan |
3.1. Cash markets are evaluated and projected price trends assessed. 3.2. Forward contract information is obtained and assessed. 3.3. Futures prices are obtained and assessed. 3.4. Options are evaluated against price objectives and the assessment of price movement risk. 3.5. Taxation and cash flow implications are assessed. 3.6. Appropriate mix of sale options is developed in a trading strategy. 3.7. Contingency plans are developed to address possible shifts in price trend. |
4. Implement trading strategy |
4.1. Appropriate expertise is sought as required. 4.2. Market information is monitored and trading strategy adjusted according to contingency plans. |
Required Skills and Knowledge
REQUIRED SKILLS AND KNOWLEDGE |
This section describes the skills and knowledge required for this unit. |
Required skills |
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Required knowledge |
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Evidence Guide
EVIDENCE GUIDE |
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The evidence guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package. |
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Overview of assessment |
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Critical aspects for assessment and evidence required to demonstrate competency in this unit |
The evidence required to demonstrate competency in this unit must be relevant to workplace operations and satisfy holistically all of the requirements of the performance criteria and required skills and knowledge and include achievement of the following:
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Context of and specific resources for assessment |
Competency requires the application of work practices under work conditions. Selection and use of resources for some worksites may differ due to the regional or enterprise circumstances. |
Range Statement
RANGE STATEMENT |
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The range statement relates to the unit of competency as a whole. |
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Cash markets may relate to: |
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Unit Sector(s)
Unit sector |
Agribusiness |
Co-requisite units
Co-requisite units |
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Competency field
Competency field |