More than ever, the marketplace for producers and users of commodities is global in scope. As a result, supply-and-demand factors that once caused barely a ripple in the domestic market are now capable of creating high degrees of unpredictability and price volatility.
This volatility, in turn poses more difficulties than ever for the profitability of virtually all businesses that are vulnerable to commodity price fluctuations – including producers, processors, importers, exporters, manufacturers, distributors and end users, but particularly farmers.
The philosophy of having a dynamic risk management strategy is to achieve the following results:
- Volatility management of commodity input and production prices
- More effectively manage budgets
- Improve ability to achieve margin goals
- Increase ability to hit profit objectives
- Mitigation of financial distress losses
