Commodity risk hedging

Companies may experience financial gain or loss from changes in commodities’ prices, which makes cash flows unpredictable and therefore difficult to plan. Different kinds of financial instruments help to hedge commodity price risk in various commodity classes, including:

  • Energy (oil, gas)
  • Metals (base and precious metals)
  • Agricultural and food products

Most common financial instruments

  • Commodity Forward - an agreement between counterparties to buy or sell specific commodity at a specific future date and price.
  • Commodity Futures - exchange traded standardized Commodity Forward agreement.
  • Commodity Swap - an agreement between two counterparties to exchange cash flows from fixed and floating commodity prices over a specific future period.
  • Structured Deal - an agreement consisting of several financial instruments to hedge commodity price risk customised for company’s specific needs.

Swedbank offers variety of financial instruments for many commodities. In order to find the best solution please contact Swedbank Markets specialists.

Ask our specialist