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Commodity Risk Management

Given recent instability, companies in industries from all over are overhauling the way they buy and hedge commodities because it is impacting them right through the supply chain. The move suggests that firms are not viewing the turmoil in the market place as a short term problem but as a long-term challenge.

Today, the physical management of supply is integrated with exchange traded products and leading-edge financial risk management systems. These changes have helped provide senior management with visibility into their cost structures while protecting the bottom line against commodity price risk.

Foreign Exchange / Currency
Currency Risk Management

Financial foreign currency risks result from the translation of revenues, receivables, purchases and sales, input raw material costs, liabilities and other monetary items at the closing rate into the functional currency. These risks can be hedged using any number of currency derivatives.

Our currency risk management group develops a wide range of currency solutions for multinational corporations. We formulate cost-effective hedging strategies to protect earnings and asset values from currency losses.

We work closely with clients to identify needs, objectives and FX exposures to deliver custom-tailored strategies and policies designed to meet the financial objectives of the client.

Risk Management Services We Provide
  • Financial & Commodity Risk Management
  • Hedge Strategies and Trade Execution
  • Risk Policies and Procedures
  • Analytical Toolsl and Reporting
  • FAS 113/ AG13 Hedge Accounting
  • Hedge Effectiveness and Regression
  • Technology and Software Solutions
Our Services
Recent advances in information technology and the lower cost of integrating information across business lines suggest that the barriers to consolidated cost management are falling.
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Monsanto Hedging Business Case

In the early 1980s, Monsanto began to notice the erosion of sales in foreign markets due to a strong dollar. The firm began to use options in order to hedge its currency exposure. The firm calculated the exposure to currency fluctuations, the revenue less the cost that constituted the profit that it wanted to protect, and bought options to cover the selling periods of products. The benefits of hedging currency exposure with options included containing costs and protecting the company from unexpected undesirable fluctuations in the value of the dollar. Hedging currency allowed Monsanto to protect operating margins and budget performance.