Hedgers

Commodity hedgers are the sellers or buyers of the actual physical commodity (e.g. farmers, oil companies, millers, etc.) who engage in hedging strategies by selling or buying commodity futures contracts to protect themselves from the adverse effects of commodity price volatility. Hedgers transfer price risk to speculators who assume higher risk for a higher profit potential. Hedgers reduce the adverse effects of changing prices, but face the adverse effect of a changing basis.