Profit or loss from commodity transactions is affected by commodity price fluctuations
Clients will incur loss if the commodity prices move against them during an individual reference period – the clients’ payments exceed the amount to be paid by the bank
In this case, the client pays the difference between the two payments to the bank
In case the transaction was negotiated as a hedging instrument, the client regards the loss as cost of hedging (hedging protects clients from significant commodity price fluctuations that could result in financial problems)
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