On this week’s episode of the Food Biz, hosts Kristyn Tarpey and Ryan Nelson are joined by Taylor Coughlin, Customer Success Manager, and Jim Sullivan, the Commercial Director at Stable - a firm helping businesses around the world manage the risk of volatile commodity prices simply and effectively. In this episode, the four discuss commodity market price volatility and the need for more extensive commodity risk management.

The three kick off the discussion by explaining what Stable does with an example. You can try to compare non-hedge-able commodities like beef to mainstream commodities like live cattle, but as we’ve seen in the past year, this can be difficult when the market is so volatile. 

A packaging plant could shut down due to Covid and this ends up resulting in beef shooting way up, but live cattle shooting way down - proving you can’t really compare the two. That’s where Stable comes in. We don’t have the direct tools to hedge beef, so Stable works with third-party data providers, like USDA, to make that information available. They’re perfecting imperfect hedges. 

They then discuss how difficult it can be to launch a new futures contract, and when it does launch, you have to hope that people actually come to trade it. This can be tough since no one wants to be the first person to trade a contract. 

Taylor then points out that no matter how great your supplier network might be, the past two years make it obvious that across the board, people are struggling to manage risk. In the past three years, we’ve seen droughts, floods, swine flu, the U.S. / China trade war, and now Covid, so these volatile market prices have almost become the new normal, increasing the need for Stable and managing commodity risk. 

Stable plans to expand past agri-food in the next year to commodities like lumber. If there is a third-party data set for a certain commodity, Stable can partner with the firm that provides it to offer risk management, so they are looking forward to growing their categories of risk extensively. 
 

Make sure to listen to the entire episode on Spotify or in the Apple Podcasts App!  While you’re there, don’t forget to subscribe. Also, feel free to reach out to us by email at news@barchart.com with any discussion topics, questions, comments, or overall feedback; Ryan and Kristyn would love to hear from you!