Commodities Price Risk Management

Commodities Price Risk Management is the management of the risk of financial loss from commodity price movements. This can be an invaluable tool for those businesses whose revenues or input costs are heavily influenced by one or more commodity prices. There are many varied commodities that can be hedged from agricultural commodities such as wheat, cotton or beef, to metal commodities such as iron ore and gold, to energy commodities such as electricity, gas and coal.

As an example, a wheat farmer, who’s main revenue stream is dependent on the price of wheat, may wish to hedge against the fall in price of wheat prior to harvesting.