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Price Risk Management

A presentation to the European CommissionPairs 5-6th July 2004

Nigel Scott, Global Head Commodity Financing and Hedging

African Cotton Producers

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"This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice and is not intended for the use of private customers as defined by the rules of the FSA. Members of the Rabobank Group trade on their own account and may from time to time hold or act as market makers in securities mentioned in this document, or may act as advisors, brokers or commercial / investment bankers to persons mentioned in this document. Please note that no member of the Rabobank Group makes any warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. All parties are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or Regulatory implications. Rabobank International is the trading name used by Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.  Rabobank International London Branch is regulated by the FSA and De Nederlandsche Bank."

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Rabobank, the largest financial service provider in the Netherlands

Member Banks Member Banks

Rabobank NederlandRabobank Nederland

GildeVenture CapitalGildeVenture Capital

RobecoAsset ManagementRobecoAsset Management

StroeveStock BrokerageStroeveStock Brokerage

SchretlenPrivate BankingSchretlenPrivate Banking

De Lage LandenInternational LeasingDe Lage LandenInternational Leasing

InterpolisInsuranceInterpolisInsurance

Alex Internet BrokerageAlex Internet Brokerage

Sarasin & Cie International Private BankingSarasin & Cie International Private Banking

Retail bankingMember banks

Retail bankingMember banks

OtherSupportOtherSupport

Wholesale bankingRabobank InternationalWholesale bankingRabobank International

AAA rated by Moody’s and Standard and Poor’s

Member banks: 328 Members: 1.4 Mio

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America

Atlanta Buenos AiresChicagoCuraçaoDallas Mexico New York* Santiago de ChileSan FranciscoSao Paulo TorontoWashington D.C.

Europe

Amsterdam*Antwerp*DublinEdinburghFrankfurt*GenevaGuernseyLondon*LuxembourgMadridMilanMoscowParis*PoznanUtrechtWarsaw*Zurich

Asia

Bangkok*BeijingHong KongIstanbulJakartaMumbai*New DelhiShanghaiSingapore*TaipeiTokyo

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With a focus on food & agribusiness outside the Netherlands

Australia & New Zealand

AucklandSydney*Wellington

Rabobank International

Commodity price risk management solutionsTools in the Toolbox

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Cotton price management toolsFixed Price –Futs / Swaps

Pri

ce p

aid

World market price

•Requires credit. •Can be done for African price of cotton with Rabobank Cotton Swaps, limited liquidity•NY hedges liquid with some basis risk

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Cotton price management toolsPrice Insurance - Options

Pri

ce p

aid

World market price

•Does not require credit. •World Bank / ITF CRM programme teaches and explains and help link with Price Providers

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Proposal for a quick fix which is effective

Price Insurance – 2 OptionsPri

ce p

aid

World market price

•Does not require credit. •Fits with World Bank / ITF CRM programme

EU – Catastrophe Option

ITF – Opportunistic Option

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Nigel Scott Executive Director,Global Financial Markets

Nigel has been Global Head Commodity Price Risk Management and Structured Commodity Finance (OECD countries), two global teams engaged in the trading of physical and derivative commodity (Cotton, sugar, coffee, cocoa, etc) transactions and asset backed finance structures, for Rabobank International since 2001. He has worked for Rabobank International since 2000.

Nigel started working for Cargill in Grain, NGFI and Vegetable Oil as a Merchant (1991-1993) under Cargill’s Commercial Management Trainee scheme, working as a grain and NGFI commodity trader. He then became a Cotton Trader for Ralli Brothers and Coney, UK, and Hohenberg Brothers (1993-1998). Nigel then worked in Cargill’s Financial markets Platform as a Senior Structurer for Cargill Investor Services in 1998, and started a number of Soft Commodity Swaps derivatives markets, including cotton swaps.

Nigel frequently acts as an Arbitrator as a member of the Liverpool Cotton Association, is a Director of the Liverpool Cotton Association and is a member of FOSFA and an arbitrator for the L.C.A.S. Nigel obtained a BSC (Hons) from Imperial College, London, in Microbiology.

Biographies