The term hedging or hedging is generally better known in the context of transactions related to banking. In fact, hedging is also widely used in commodity trading. In history, the CBOT (Chicago Board of Trade) was established in 1848 by agricultural entrepreneurs in the U.S. as a solution to commodity price fluctuations of grain (grains). When it was introduced forward contract transactions that later evolved into futures contracts (futures contract).

Understanding hedging in commodity markets is the protection from the risk of losses due to price fluctuations. Can implemented hedging through futures exchanges with open contracts to buy or sell a commodity for commodity trading in line with those in the physical markets. The perpetrators of this hedging called hedger, the hedger consists of the buyer (long hedge) and the hedger sellers. Buyers generally Hedger plans to buy commodities in the physical market in the future. To protect the transactions from the fluctuations, such as price increases in the future, hedger buying futures contracts currently buy position (buy). Buying Hedge is generally done by the exporters, processors, users of raw materials such as factories, and so on. Its function is primarily maintain price stability and continuity of supply.

For example, manufacturers such as highly dependent syrup with sugar prices as the main raw material. If the expected price of sugar will increase, the budget to maintain stable costs, employers are able to open contracts to buy commodities as a form of sugar futures hedging. Thus, when the price of sugar rises, the loss of physical transaction can be closed with profits from futures markets.

The same thing can be done by, for example, airline companies, in dealing with fuel price hikes avtur or jet oil. Certainty of price stability is the major cost components through a process of hedging - will facilitate the implementation and management of the company's financial projections. Hedger short sellers or hedge is a hedger will sell a particular commodity in the physical market in the future. To protect the sale price of commodities, hedger will open futures contracts now with a short position (sell).

Selling hedge is usually done by the producers, especially farmers, in order to protect from possible decline in commodity prices such as harvest time. This sale Heging should be used by agricultural employers or farm cooperatives so that farmers do not lose money at the time of the harvest season due to falling prices in the physical markets. Perpetrators of this hedging, both the long hedge and short hedge, and then have to offset (closed) contracts that have been taken in time. If the hedger had taken a position in the market to buy futures, then he should close the transaction by selling the futures exchange. While terminating the hedger selling a contract to buy a position in the futures market.

Many people in our country that can really benefit from these hedging transactions, ie, commodity producers, farmers, entrepreneurs, consumers, investors, futures exchanges as well-in this case Jakarta Futures Exchange (JFX) - and the futures broker if the transaction type intensified. Indonesia as one of the main commodities in the world is the potential to further develop futures market with one of the benefits of hedging transactions carried out fluctuations in commodity prices. Perhaps, you can participate in it.