Futures Technology Corp. develops and implements risk management strategies for every segment of the softwood lumber industry. Look below for more information on each service FTC provides:

Basis Trading
The basis is defined and derived by taking the difference between the local lumber cash market price and the nearby lumber futures price. Basis Trading provides a secondary market (futures) to buy or sell wood to take advantage of price discrepancies that arise between the cash and futures markets (the price of lumber now versus its price at some point in the future).

Certain market conditions will create a discount / premium in either the cash or futures markets, thus enabling the basis trader to buy something at a discount or sell something at a premium relative to their primary (cash) markets.

Production and Inventory Price Management
Companies either produce or buy cash lumber which creates a long cash inventory position. Inventory price hedging allows these companies to sell short the lumber futures to seek price protection in the event prices fall before they are able to liquidate their long inventories at a profit.

Inventory price hedging reduces a company's overall market exposure in owning physical inventory. Could also be characterized as price protection insurance. Inventory price hedging insures that a certain percentage of a company's long cash inventory is sold via the futures market at a set price in the future.

Forward Pricing Strategies
These strategies give companies the ability to lock-in or guarantee a set price on a given item at a set date in the future. This enables a company to become more aggressive in booking jobs in the future.

This strategy can be utilized to expand business activity without increasing the risk to the company, and can offer fixed or flexible cash prices on lumber commitments thirty days to ninety days plus.

Exchange-for-Physicals (EFPs)
Buyer & seller can personally negotiate an agreed upon price, tally, freight and ship date without having to wait until the underlying (spot) futures contract expires.

An EFP refers to a privately negotiated and simultaneous exchange of a lumber futures position for a corresponding lumber cash position apart from the public auction market. An EFP may be executed on or off the exchange trading floor.

Lumber Futures Delivery
The transfer of a lumber contract from a seller of a futures contract to a buyer of a futures contract.

Price is determined by the expiration price of the deliverable month of the futures contract. Tally and freight are set within certain parameters determined by the Chicago Mercantile Exchange. Used when certain market conditions provide a more attractive delivery price than what exists in the current cash markets at the time of delivery.

Currency & Interest Rate Hedging
Hedging refers to the offsetting of price risk in any cash market by taking an equal but opposite position in the futures market. Simply put, currency and interest rate hedging offers a means of protection against loss due to adverse currency rate and interest rate fluctuations.

Canadian and European companies involved in the exporting of lumber into the U.S. markets as well as North American companies involved in the exporting of lumber to Japan can use the Foreign Exchange (FX) futures markets to manage the risks associated with currency rate fluctuations.

Interest rates or the cost of borrowing money to a lumber company can have a profound and adverse effect on the company's ability to maintain a constant cash flow. The threat of increasing interest rates can dramatically alter the cost to borrow money, which in turn can limit a company's ability to procure inventory. Interest rate hedges can potentially reduce the cost of borrowing money and help maximize a company's cash flow.

How we can help your business

Risk Management Specialists
FTC works with the softwood lumber industry by developing comprehensive risk management strategies that utilize the futures markets.

Maximize Profitability
Underlying directive of using risk management techniques to help our clients maximize profitability, minimize market exposure and increase market share.

Custom Business Strategies
FTC constantly creates and refines proprietary hedging strategies that are custom tailored to meet the needs of each individual client. Each program is unique to the present situation, FTC doesn't believe in the blanket approach in developing risk management strategies.

Unique Market Perspective
Our market insight and market analysis offer a refreshing perspective on the continuously evolving lumber cash and futures markets. A thorough blending of fundamental & technical analysis provides a clear perspective of the current lumber markets.

Real-Time Market Analysis
To hear our latest market analysis and how it relates to your current business plans, please call us @ 216-831-7555.