Meats - Hedge Accounting

By: Craig Haymaker, CPA, Chief Operating Officer


Reducing price risk is a high priority within the meats supply chain. Most meat producers, suppliers and consumers see the value in hedging. The reasons are varied but the desire to hedge comes primarily from a preference for greater price certainty and locking-in margins. These are worthwhile pursuits, to be sure, but often the results are mixed. In many cases, the entity hedging is successful at reducing price risk in its physical meat sales or purchases but is left with earnings volatility caused by the change in value of its hedges – exchanging one source of volatility for another. This is an unfortunate trade-off that leaves stakeholders wondering whether or not hedging was worth it in the first place.

How does an entity take credit for risk management and improve its earnings results? Hedge accounting. Hedge accounting is a preferential accounting treatment. It helps entities to smooth out period-over-period earnings and presents a more budget-friendly result. With hedge accounting you can participate in hedging activity to limit price volatility in meat purchases or sales while reducing earnings volatility in financial reporting. Call a HedgeStar consultant today and have a conversation about how we can help you with hedge accounting.


Schedule a demo with a HedgeStar consultant today!

Contact the Author:


Craig Haymaker, Chief Operating Officer

Phone: 952-208-5704

Email: chaymaker@hedgestar.com


Media Contact:


Megan Roth, Marketing Generalist

Phone: 952-746-6056

Email: mroth@hedgestar.com


Categories

HedgeStar

6400 Flying Cloud Drive #200

Minneapolis, MN  55344

Connect with us

  • White LinkedIn Icon
FB-f-Logo__white_512.png

© 2018 by HedgeStar.  All rights reserved.