Attara—a firm dedicated to simplifying hedging solutions for SMEs—has recently launched its inaugural trends report, The World at Unrest. Founded by former Bank of America and Barclays FX trader Richard De Meo, Attara aims to equip businesses with the tools to manage price volatility effectively.
This comprehensive report unpacks the key forces shaping commodities markets in 2025. In this article Richard De Meo shares his expert insights and predictions, offering a deep dive into the trends that will impact industries worldwide.
The economic outlook for the year ahead is painted with a brush of uncertainty. The hopeful group consensus is growth, but at what rate we cannot be sure. Morgan Stanley has cut the UK 2025 GDP growth forecast to 0.9% from 1.3% and businesses are preparing to tighten their belts once again as consumer confidence remains lowered.
A number of small businesses are now in survival mode following the Autumn Budget given by the new Chancellor last year. A change to National Insurance tariffs, among other new policies, means it will be a long winter for many SMEs.
Businesses impacted by these economic headwinds are no doubt painfully aware of the restriction on their margins. However, there’s another threat at play that could be silently draining profits, one that many business owners overlook despite an easy solution. How does the commodity market impact SMEs?
A question of volatility
Somewhere along the supply chain, many small businesses will deal with raw materials. Ever considered how a haulage company is impacted by the changing price of fuel, bakeries are reliant on the price of grains and a construction company is at the mercy of changing metal prices?
The trading place for raw materials, and commodity markets are, in their nature, volatile. They’re a complex web that can be impacted by changes in so many factors: political unrest, extreme weather, policy changes or economic pressures. Major macro movements can change the price of a unit in an instance.
SMEs are already navigating a challenging economic climate; why should this be compounded by a cloud of uncertainty over their outgoings? Financial decision-makers cannot begin to plan ahead if they don’t know what the cost of their materials is going to be next month, let alone for the rest of the year.
The answer?
Enter hedging.
Traditionally, commodity hedging has been reserved as an offering from big banks to larger companies – the multinationals and conglomerates of the world. Most mid-cap businesses don’t even know about hedging, which is hardly surprising considering the specialised nature of it.
The process of hedging uses financial tools to offset the price swings of raw materials, allowing businesses to plan ahead. For example, a family construction firm will benefit hugely from being able to lock in the price of their metals for the next few months.
Granted, there will always be an event around the corner that might impact your bottom line; it’s the nature of business, and we just cannot predict it. The difference is, with hedging you don’t need to try to predict what’s around the corner. The element of risk is taken firmly out of your hands, and given to specialists, who have been doing this for years.
The expectation that a bakery owner has the understanding and wherewithal to play the raw material markets to obtain the best prices for ingredients is unrealistic. It is this lack of awareness and understanding that has led to commodity hedging being the best-kept secret for smaller companies, who, in turn, are the industries that could benefit from hedging the most. SMEs account for around half of private turnover in the UK, so it’s important that business owners are fully supported to get on with what they do best, running their business.
A new era
So far, small businesses have been left out of a tool they didn’t know existed and likely don’t know how to get started.
We’re witnessing the emergence of a whole new era, whereby the barrier of accessibility is being lowered thanks to simplified intelligent hedging tools that any business can adopt.
One key step SMEs can take to streamline these processes is function allocation. Normally, there isn’t a specific person responsible for the process of procuring, testing, and implementing new solutions. Particularly in the quick-paced life of an SME, bringing on new processes is challenging in an environment where running the business takes priority, but setting aside the time to look for outside knowledge can help to unveil inefficiencies and address them. Our advice? Considering commodity hedging is the best first step your business can take.
As small businesses grapple with economic uncertainty, it’s clear that traditional methods of cost management are no longer enough. The volatility of commodity prices presents an unpredictable challenge, but the solution is hedging. What has long remained out of reach for SMEs is now a technology solution that is breaking down barriers. Allowing smaller businesses to finally have the opportunity to protect their margins and plan for the future with greater confidence.