Pricing and price lifting is done at the request of the customer or supplier, and is part of normal contract maintenance. Simplified price lift processing assists the user and ensures more efficient contract maintenance.
There are three options for price lifting in SAP Agricultural Contract Management:
The first option is a regular lift, which can be done without an equity calculation.
This option involves updating the pricing lot fixations to reflect the lift.
The second option is lifting with equity.
This option involves updating a reference price. The system then calculates the equity based on the reference price, minus the fixed price, multiplied by the quantity being lifted. The calculated equity is then automatically assigned as a fee, which will be included in the settlement process.
The third option is lifting with CDOTE.
This option will always trigger the equity calculation process.
Equity Lifts
On this screen, the user selects whether the lift is with or without equity, and specifies the quantity to be lifted.
Future Component
This additional screen only appears if you are lifting with equity being calculated.
Summary
If a lift without equity is done, it means that the lift will only apply to pricing lots that have not been consumed through the settlement process. This option is typically used when there is a request from the counterparty to change a price. So, before you can make the price change, you need to perform the lift of the original price.
In some cases, there may be administrative costs associated with making pricing changes. Therefore, the counterparty may choose to lift with equity (fee) to cover these costs. This is typically agreed upon before or at the time of contract creation. The fee for lifting with equity would be deducted during the settlement process.
It's important to note that you can only lift one component at a time, so you cannot simultaneously lift futures and basis. If the equity is relevant for Foreign Exchange (FX), you can also lift the FX component, and the system will provide a default eligible quantity, which can be overridden if needed.
If you choose the equity route, you will need to input a new reference price. The system will automatically calculate the lift equity based on the difference between the reference price and the existing price. The reference price is the agreed-upon new price with the counterparty.
The lift itself is not automatically replacing the price in the contract. It is the first step to remove the existing price. After the lift, you would need to separately go in and add the new price. The equity calculation determines the fee based on the price difference.
Lift Fee
A prerequisite to the lift with equity process is to have a lift fee set up as master data within the fee framework.
Configuration to Activate Individual Lift
To activate the feature switch, in the SAP menu, go to Logistics General → Global Trade Management → Agricultural Contract Management → Basic Settings → Activate Feature
Alternatively, use transaction SPRO.
FLAT 2 is the same as an adjustable flat pricing approach. If this switch is turned on, then you can lift both futures and basis components for Adjustable Flat (AF) pricing approach contracts. When it is lifted, the pricing approach changes to Componentized Flat (FP). If it is turned off, you can only lift the futures component for adjustable flat.
Price Roll
Price rolls are carried out at the request of a customer or supplier, or as maturity codes are nearing their expiration. Simplified fixation roll processing is required to assist the user and provide more efficient contract maintenance.
Price rolls can be executed for partially fixed prices (NFE, NBE). They can also be executed with or without CDOTE integration.
The price is rolled from one future month to another future month. A spread is calculated as the difference of the current market price for the two future months. The spread is then incorporated into the rolled price.
Price rolls can be executed through the mass pricing workcenter or directly in the contract change transaction.
The flow of the price roll depends on whether it is a regular roll or a roll with CDOTE. In a regular roll, you need to specify the new futures month by entering the desired month and its corresponding futures price. The system then calculates the spread and updates the price fixation accordingly.
On the other hand, if you perform the roll with CDOTE, you still need to specify the new future month. However, the process involves hedging the new future price through communication with a broker. When the new future price is determined, the system calculates the spread and updates the price fixation based on the provided information.
Regular Roll
In this example, when performing the roll, you need to indicate the quantity that you're rolling. The system prompts you to enter the reference futures price or fetch it from a designated source. In this particular example, the current price of the old maturity code is $11, while the new reference futures price is $15.
The system then calculates the spread, which is the difference between these two prices. In this case, the spread is a negative value of -$4. The system proceeds to roll the price by adjusting it based on the difference between the fixed price and the spread.
