Commodity Price Risk

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Dictionary Says

Definition of 'Commodity Price Risk'

The threat that a change in the price of a production input will adversely impact a producer who uses that input. Commodity production inputs include raw materials like cotton, corn, wheat, oil, sugar, soybeans, copper, aluminum and steel. Factors that can affect commodity prices include political and regulatory changes, seasonal variations, weather, technology and market conditions. Commodity price risk is often hedged by major consumers.

Investopedia Says

Investopedia explains 'Commodity Price Risk'

Unexpected changes in commodity prices can reduce a producer's profit margin, and make budgeting difficult. Fortunately, producers can protect themselves from fluctuations in commodity prices by implementing financial strategies that will guarantee a commodity's price (to minimize uncertainty) or lock in a worst-case-scenario price (to minimize potential losses). Futures and options are two financial instruments commonly used to hedge against commodity price risk.

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'Commodity Price Risk'

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    ... futures contracts to protect itself against commodity price increasesÂ… these ... A 10
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  • 10 Risks That Every Stock Faces

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    ... TUTORIAL: Risk And Diversification Commodity Price Risk Commodity price risk is
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  • 20 Investments: Futures Contract | Investopedia

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    ... Objectives and Risks There are two reasons to use commodity futures contracts: to
    hedge a price risk or to speculate. What do we mean by hedging? ...

  • Forex Investing: How To Capture Commodity Fluctuations

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    ... Commodity investments help investors diversify their personal portfolio risk and
    capture ... The commodity price is testing support at $3 per pound and is ...

  • How To Invest In Commodities

    http://www.investopedia.com/articles/optioninvestor/08/invest-in-commodities.asp
    ... Although commodity futures contracts provide the most direct way to participate
    in price movements, other types of investments with varying risk and investment ...

  • Trading The Soft Commodity Markets

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    ... to invest should carefully consider the risk involved and be ... see Commodities: The
    Portfolio Hedge, Commodity Prices And ... and Who sets the price of commodities? ...

  • The Midas Touch For Gold Investors

    http://www.investopedia.com/articles/optioninvestor/09/midas-touch-gold-investor.asp
    ... Investment is a choice to risk capital with the hope of gain; however, ownership
    is for the sake of ownership ... The commodity is the same, the price is not. ...

  • Wendy's Flat But Focused

    http://stocks.investopedia.com/stock-analysis/2011/Wendys-Flat-But-Focused-WEN-DF-SLE-YUM-CMG0512.aspx
    ... TUTORIAL: Risk and Diversification. ... products throughout the year and plans price
    hikes as ... Commodity Pressures Continue Food companies that have already reported ...

  • A Beginner's Guide To Hedging

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    ... against nearly anything, whether a stock, commodity price, interest rate ... This is
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  • High Commodity Prices Are Here To Stay

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    ... For more, see 7 Commodity ETFs To ... An investment is only a good one when made at the
    right price. ... to trade the stocks mentioned in this stock analysis, risk free ...

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