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Receiving Foreign Funds
How a seafood distributor leveraged window forwards to optimize a CAD 264,000 contract
Industry:Food & Beverage
Client:NYC-based seafood distributor
Region:United States
Exposure:264,000 CAD (~$203,000 USD)
Hedge Ratio:100%
264K CAD
Contract Value
~$203K
USD Equivalent
100%
Hedge Ratio
9 Months
Timeline
Background
A NYC-based seafood distributor contracted to supply Canadian chain restaurants. The contract value was 264,000 CAD (~$203,000 USD) with a 9-month payment timeline — 25% (66,000 CAD) within 4 months and 75% (198,000 CAD) within 10 months.
Products Used
Delayed Open Date Window Forwards
Challenge
- Unfavorable exchange rates when purchasing seafood from overseas markets
- Costs exceeding planned budget due to currency fluctuations
- Long payment timeline creating extended currency exposure
- Need to align hedging with staggered payment schedule
Strategy
- 66K CAD window forward: opening in 3 months, closing 5 months out
- 198K CAD window forward: opening in 9 months, closing 11 months out
- Delayed open dates to leverage interest rate differentials
- Aligned hedge maturities with expected payment schedule
Outcomes
- Achieved better exchange rates through interest rate differential leverage
- Generated profit versus converting at spot price
- 100% hedge ratio eliminating currency uncertainty
- Payment schedule fully aligned with hedging strategy
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