# Agricultural barter: soybean hedging and price locks | UHEDGE > Barter hedging for input distributors and dealers: grain price locks, basis and FX under delegated management until physical delivery. Canonical: https://uhedge.com.br/en/para-quem/barter-distribuidores-insumos ## Agricultural barter with managed soybean hedging and price locks In barter, price risk does not sit with the farmer. It sits with whoever finances it. Agricultural barter: the grain price lock, the basis and the FX leg sit under delegated management, protecting margin between input pricing and soybean or corn delivery. The barter deal closes with a defined parity and, from the farmer's standpoint, the cost is locked. The dealer delivers the inputs and waits for grain at harvest. In between, three markets move: exchange-traded grain, the FX of imported inputs and the basis of the delivery location. The lock the farmer bought was sold by someone, and by harvest the deal's margin is no longer the one calculated at signing. ### How the exposure works - Parity is fixed upfront and revenue only materialises at delivery. In between, the deal's margin swings with futures and FX. - The delivery location basis is usually left out of the calculation, even though it determines the price actually realised in the region. - Hedging that position with discipline requires a desk, a system and daily monitoring. Without them, the practical alternative tends to be shrinking barter volume or living with the exposure. ### How delegated management works - Risk governance agreement: Parameters, objectives and limits set in writing and aligned with the company's risk appetite and operating targets, before any trade. - Strategy implementation: Structuring the three-leg hedge: exchange grain price, location basis and input FX, with models calibrated to Brazilian conditions. - Active management: Trading the delegated volume with a focus on protecting margin levels and capturing hedge cost improvements, including margin call management. - Performance monitoring: Daily position and P&L reports, mark-to-market by strategy and counterparty, with no black boxes. ### What the company gains - Margin protected between pricing and delivery. - Barter volume that is not done today because of technical limitations. - Regional basis priced rather than estimated. - No need to build a desk or hire a quant team. ### What stays with the company - The client, the origination and the balance sheet remain entirely yours. We are not a counterparty to the commercial transaction. - Management runs within the agreed limits and is reported daily, with an auditable trail. - The mandate can be partial, starting with a share of the book, and expanded as results come in. ### Hedge management track record - Hedge alpha: 2.6 c$/lb. Average reduction in hedge price versus a passive futures lock. - Information Ratio: 3.5. Consistency of alpha generation adjusted for tracking error. - Hit rate: 90%. Accuracy of hedging decisions over an auditable historical series. ### An alternative for those who prefer to manage in-house For companies that prefer to keep management in-house, we license the UHEDGE CTRM: instrument calculator, physical curves with location basis, daily marking, VaR decomposed by factor and end-of-day reporting. Both fronts can be combined, with a share delegated and the rest run internally. ### Suggested next step A no-cost diagnostic on a barter season already contracted. With the period's deals, we can show which share of margin was exposed to price and what a three-leg structure would have changed in the result. A forty-five-minute meeting is enough to decide whether it makes sense to continue. ### Frequently asked questions - What is agricultural barter? Inputs exchanged for future production: the grower receives fertiliser, seed or crop protection and pays in grain at harvest. The dealer's margin depends on the grain price at delivery. - What is the risk of barter without hedging? Between input pricing and delivery, the grain price, the regional basis and the dollar all move. Without a price lock, contracted margin can turn into a loss. - Who executes the hedge? UHEDGE, as a CVM-authorised manager, under a delegated management mandate with a policy and limits agreed with the dealer. ## Who leads and notes ### Who leads it Rafael Lins dos Anjos, founding partner. Mechatronics Engineer from Poli-USP, with master's degrees in Economics from Insper and in Finance from London Business School. Around twenty years in global banks and commodity merchants, including Santander, Macquarie in London, Banco Pine and ED&F Man, where he headed the global OTC desk. CGA and CGE certified by ANBIMA. ### Sources and notes Track record: results of UHEDGE managed hedge portfolios, measured against a passive sugar futures (ICE) benchmark over an auditable historical series. The commodities fund began operations in November 2024. Calculation memo and methodology available on request. Past performance is no guarantee of future results. Informational material only; not a public offering, an investment recommendation or a guarantee of results. Derivatives transactions involve risk of loss. The terms of each service are defined by contract. ### Related profiles --- UHEDGE — asset manager regulated by Brazil's CVM. contato@uhedge.com.br · +55 (19) 3326-1178