Commodity forwards

[Former Member]

Dear Experts,

We are currently using the Treasury module in SAP R/3 ( ECC 6.0 EHP 4 ).   Now we want to configure the Commodity Forwards.

I would like to know the process and the background configuration required for handling the month end price variation  between the spot price and the month end price.  Currently we are manually handling and posting it.

Also if any one could share me the complete configuration steps for Commodity forwards.

Thank you in advance.

George

[dfg1988]

Hi George,

The process is a bit different that exposed by Jain Varghese, also if you are slight difference from the Money Market.

I tried to create a basic process flow in it.

First, you have to create the commodity Master data:

Master Data:

Transaction TPM_CTY_MASTER. There you created the commodity master data

Transaction Manager:

FTR_CTY01: Create commodity forward

Fulfill  all relevant data: Commodity ID, Name, Quantity, UOM, Contract price,

Contango/Backwardation, Payment amount and cash settlement flow etc.

FTR_CTY04: Settle commodity forward (Check that all data entered are being stored correctly)

Back Office:

Post deals using transaction TBB1 and check if the posting is correct. 

Month end (NPV of Commodity Forwards) Within the  MRA Market Risk Analyzer:

JBDO:  Create a financial:

Enter the company code and the transaction number in the field marked 'Derivatives'. Click on the create/change button. On the following screen, check the Analysis(RM) button. On the following screen, check Active Analysis Indicator. Enter the transaction number in the Transaction field of Analysis Characteristics tab, and save the financial object.

JBRX: Evaluate To evaluate the transaction: 

Enter the evaluation currency, type and date. Enter the horizon date, which should be greater than Evaluation date and less than Commodity

forward datementioned inCommodity Forward transaction. Go to Characteristics tab, and enter company code and transaction number fields.

Execute the transaction to get the NPV of Commodity

forwardtransaction.

TPM1: Key date Valuation: You have to carry-out the TPM1 For both method, the process without the  MRA You can check-out on the thread:  http://scn.sap.com/thread/1517782

Cash Settled:

FTR_CTY02: Change commodity forward

Here you perform the Cash Settlement (Final of the Contract

Back Office:

Post deals using transaction TBB1 and check if the posting is correct.

Transaction TPM18: Post the Realized profit and loss is posted 

You will try to create a process and post here, the documents that I have is not in English, so doesn't help at all.

Best.

[former_member198450]

Dear George,

Below is standard process in commodity.

Process in Commodity

• Create deal: FTR_create
• Settle deal: FTR_Edit
• Posting: TBB1
• Enter market data for security classes -FW17
• Posting all initial cash flows -TBB1
• Post variation margin – PMVM
• Matching long and short position: TPM91
• Result: In future account: TPM8 or subledger TPM13

Regards,

Jain

[Former Member]

Dear Jain,

Thanks for your response.

The steps mentioned here is for Futures.  I am looking for Commodity Forwards.

Regards

George

[former_member198450]

Dear George,

Opps. Ok for forward you can refer standard product type 80C and process as below.

• Create deal: FTR_create
• Settle deal: FTR_Edit
• Valution: TPM1( Month end valution)
• Due date: TBB1
• TPM18

Regards,

Jain

[Former Member]

Dear Jain,

Thanks for the response.

If will be helpful if you can give me some more details on Month end valuation TPM1 with the prerequisites .  Also where do we maintain the month prices for a commodity.

Regards

George

[former_member198450]

Hi George,

As Rohit suggested, YOu have to run TPM60 for valution and you can maintain security price in FW17.

Regards,

Jain

[Former Member]

Dear Jain

Can you help in getting any documentation or link where i can get an complete configuration steps and business process steps specifically for commodity forwards.

While we have money market configured in our system,  i am very new to Commodity forwards transactions.

Regards

George

[former_member198450]

Dear Gerorge,

accept my apology, I really don't have any document handy to share.  Please search for sap best practice, you might get some.

PS: In case we answer you query, Please close the thread.

Regards,

Jain

[Former Member]

Dear Jain,

Before closing the thread, i want to check with you the process to close a open forward contract without using the cash settlement option.  In our business, we always do the squaring off a sell contract with  a buy contracts.

Regards

George

[former_member198450]

Dear George,

I don't have in depth knowledge of SAP commodity. Hence i will not able to help you out much but i am pretty sure in commodity forward in transaction manager can only settle in cash.

Regards,

Jain

[rohitbali]

For month end price variation configuration:

define position management procedure,

assign position management procedure,

Set the Effects of the Update Types on the Position Components,

Assign Update Types for Valuation,

Define Account Determination.

Run TPM1 for valuation

Regards,

Rohit Bali

[Former Member]

Dear Rohit,

Thanks for your quick response.

Is there any pre requisite for running TPM1, system prompts me to maintain NPV for each transaction.  Also, where do we maintain the Month end price of the commodity.

Regards

George

[rohitbali]

Prerequisite is to run TPM60 before TPM1. You can maintain price at commodity master.

REgards,

Rohit