Mark-to-Market Reporting in SAP IS-OIL and Commodity Management

In commodity-driven industries—such as metals, energy, and agriculture—businesses face constant price fluctuations. To manage this volatility and accurately reflect financial exposure, Mark-to-Market (MtM) Reporting is essential.

This capability enables clients to evaluate open financial and logistics positions (such as futures, forwards, stock positions) using current market prices. The valuation helps derive unrealized gains or losses, which are key inputs to risk management, accounting, and treasury operations.

What Is Mark-to-Market Reporting?
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Mark-to-Market Reporting (MtM) in SAP IS-OIL and Commodity Management is a critical function for businesses dealing with volatile commodity prices. It allows you to evaluate your open physical and financial positions using end-of-day market data, helping derive unrealized profits/losses for trading, accounting, and compliance reporting.
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This MtM process supports oil, gas, metals, and energy sectors where price fluctuations directly impact financial exposure.

Why Implement Mark-to-Market Reporting in SAP?

Implementing MtM reporting provides the following key benefits in SAP Commodity Management:

✔️ Real-time visibility into risk exposure

✔️ Integration of financial and logistics positions for better decision-making

✔️ Support for regulatory frameworks like IFRS 9

✔️ Foundation for risk analytics and forecast modelling

✔️ Accurate valuation of commodity contracts and inventory
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Industry Use Case
Mark-to-Market Reporting for an Oil & Gas Trading Company Scenario:‍

An international energy company dealing with crude oil and refined products uses SAP IS-OIL and Commodity Management to manage long-term supply contracts, futures, and physical inventory.

Challenge:
They need to evaluate their trading portfolio daily using market-based pricing to manage exposure and report on unrealized gains/losses.

Solution:
Implement Mark-to-Market Reporting by integrating market data, defining portfolio structures, and enabling day-closing reports in SAP.

How to Implement Mark-to-Market Reporting in SAP!

Follow this structured approach to enable Mark-to-Market Reporting capabilities in your SAP landscape.
Step 1: Load Generic Market Data (GMDA)

Purpose: Populate the benchmark prices table used for MtM reporting
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• Transaction Code: CMM_LOAD_GMDA

• Target Table: CMM_GMDA

• What it does:
  Loads benchmark prices for commodity forwards, futures, and basis values from various market sources into the Generic Market Data table.

• Pre-condition: Market data (quotes) must exist for commodities in FDCS17/FDCS17B.

Step 2: Maintain Commodity Prices
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Transaction Codes:

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• FDCS17 – Edit Commodity Prices

• FDCS17B – Edit Basis Prices
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System Behavior:

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• Newly entered quotes will automatically update CMM_GMDA.

• For older quotes (created before switch activation), run CMM_LOAD_GMDA to load references.

Step 3: Configure Portfolio Hierarchy for Reporting
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Navigation Path (SPRO):
Financial Supply Chain Management → Treasury and Risk Management → Basic Analyzer Settings → Define Portfolio Hierarchy

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What to Do:

• Define key structures (e.g., company code, commodity type, business unit)

• Enable segmentation of MtM results for internal reporting

Step 4: Implement Required BAdI (if hierarchy is extended)
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Navigation Path (SPRO):
Financial Supply Chain Management → Treasury and Risk Management → Basic Functions → End of Day for Commodities

BAdI to Implement:
Add Fields to Key Structures to Map Hierarchy Nodes

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Why:
If your portfolio hierarchy uses fields beyond standard company codes (e.g., trading desk, region), this BAdI allows mapping those dimensions into your MtM logic.

Step 5: Prepare Day-Closing Data Structures
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Action Items:

• Define required end-of-day data sources

• Ensure consistent market data feed into SAP

• Create variants or background jobs to run CMM_LOAD_GMDA daily

Purpose:
Provides a foundation for day-end activities like risk exposure evaluation, forecasting, and accounting.

Step 6: Enable Reporting Applications
Once the basic data setup is complete, you can use the following applications:
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• Market Risk Analyzer
  For analyzing price volatility, VAR (Value at Risk), exposure sensitivity

• Post Accounting Documents for Mark-to-Market
  To post financial results of valuation into accounting

Notes & Recommendations
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• Ensure all relevant commodity contracts are maintained with proper pricing conditions.

• Activate necessary business functions and switches for Commodity Management.

• Schedule background jobs for periodic loading of market data to avoid missing EOD benchmarks.

• Run initial load and validate MtM reports in test system before moving to production.

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