Hedging Advisory

CPM’s commodities price risk management services are client tailored and client driven. As a non-dealer market participant, CPM customizes hedging solutions without any bias toward particular structures, strategies, counter-party, or means of execution.

Many companies take their hedging advice, including which strategies and instruments to use, and the prices of these hedges, from the banks and brokers taking the other side of the transaction. CPM Group is not a bank or a broker, and never takes the other side of a client’s transaction; our advice and interests are solely aligned with those of our clients. We strive to provide the most cost effective and efficient hedge solutions.

Our hedging advisory process involves detailed analysis of clients’ commodities related exposures, client specific development of price risk management programs, cost-effective implementation and execution of commodities price risk strategies, and ongoing monitoring and support of hedge programs.

CPM’s role can be as active or as passive in the commodities management process as the client requests us to be. We advise companies at various stages of their price risk management needs.

Areas of involvement include the following

  • Consulting related to analyzing the risks and rewards, advantages and costs of hedging programs.

  • Training and education on hedging.

  • Consulting with executives and directors on hedging, assisting in drafting suitable, comprehensive board resolutions and hedging management directives.

  • Producer hedging tied to financing or operations.

  • Programs to protect against high production and/or consumption costs.

  • Strategic cash flow requirements, short and/or long term.

  • Scenario planning and analysis.

  • Price risk management program review and development.

  • Analyze and modify legacy hedge programs.

  • Evaluate proposals presented by counterparties.

  • Consumer client requests.

  • Communication of hedge program and strategy to internal, shareholder, and external audiences.

  • Hedging as providing strategic advantage.