Key points
- A common basis for commodity price exposure: inventory + priced purchases not yet received − priced sales not yet delivered ± unpriced contracts − hedge positions.
- FX exposure arises from future foreign currency receipts and payments, including receivables and payables under signed contracts and forecast cash flows.
- Exposure is generally reported by commodity, legal entity and tenor (by month), with limits and alerts set accordingly.
In practice
Many trading companies still compile exposure in spreadsheets every day: sales staff report contracts, the warehouse reports inventory, traders report positions, and risk management merges it all by hand. The problem is inconsistent definitions and stale data, and it is even harder to trace a given exposure back to the contract it came from.
Exposure management has to solve three things. First, a single definition: which contracts and inventory count, and how unpriced contracts are treated. Second, event-driven updates: exposure changes automatically when contracts, pricing, goods movements and futures fills occur. Third, traceability: exposure at any point in time can be drilled down to individual documents, so it can be explained and acted on. Limits should cover both total exposure and each tenor, to avoid exposure piling up in the nearby months.
How Tranexio supports it
Tranexio calculates consolidated exposure and physical exposure in real time from contract, pricing, inventory and futures fill events, flags contingent exposure arising from unpriced contracts, and provides a daily pricing exposure report and position reports. See Hedging and hedge accounting.