how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.
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Ray Dalio talks about it with [McDonalds chicken nuggets](https://youtu.be/feBb4ovMIAQ?si=c5ALNN0B08IB9WGS). All sorts of items in the market have weird correlations and can be used to hedge prices. Things like when chicken goes up, pork goes down or whatever. So a company like McDonalds can hedge prices by buying other commodities that go up in price faster or slower. They can hedge the feed prices and whatnot
Another good example would be shipping, McDonald’s has to pay for stuff to get transported on trucks which burn diesel fuel. If diesel fuel goes up there cost of transportation also goes up, but they can just buy large options on oil and as diesel goes up, so does the value of their holding in oil so they’re already “on the ride”so to speak and thus net out a smaller increase in cost because they
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