By Daniel M. Perkins, CTP
AFP RISK! newsletter April 2010
Companies hedging commodity risk traditionally relied on procurement strategies such as fixed price contracts, escalation clauses and inventory stockpiling to minimize the risk of price escalation. But with today’s volatile commodity pricing, procurement measures alone often are not enough. Meanwhile, greater risk is forcing companies to step into the commodities markets for the first time, using derivatives instruments to further offset rising prices.