The Futures Market as a Tool for Raw Material Cost Management

Historically the prices of agricultural commodities have always fluctuated greatly when we compare the harvest period and the off-season. These fluctuations cause a great deal of disruption to business. Often all marketing and strategic planning can be deeply compromised depending on how strongly the prices of these commodities fluctuate. Through a study of the cost structure of McDonald's beef burgers using operations with the Cattle Futures Market it was possible to predict what the cost of these burgers would be in the off-season.