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I understand hedging tomatoes if Walmart is selling tomatoes. However, the OP says "oil futures". I think Walmart doesn't sell crude oil, heating oil, soybean
by appleiigs 7y ago
I understand hedging tomatoes if Walmart is selling tomatoes. However, the OP says "oil futures". I think Walmart doesn't sell crude oil, heating oil, soybean oil. Even for transportation, you'd hedge gas, diesel etc. I wonder why oil futures.
- donarb 7y agoWalMart has started selling gas at its stores.
- barbecue_sauce 7y agoNot only that; it has to fuel its distribution fleet.
- techsupporter 7y agoWalmart trades oil futures for the same reason Southwest Airlines does. During the mid-2000s, Southwest got so good at hedging and futures trading--plus was one of the only airlines that hadn't gone bankrupt so had the cash and credit and good reputation to trade on--that it was routinely called "a commodity desk that happens to fly airplanes."
- pc86 7y agoIt's the same principle just a couple layers removed. A spike in oil prices means a downstream spike in anything that needs to be transported via truck, which is approximately 99.8% of what Walmart sells.
- SllX 7y agoTo be honest I didn’t see the word “oil” initially, but other comments already addressed this: Walmart does have to deal with large quantities of oil and related commodities. In addition to their grocery business, they also run a large logistics operation, and the price of the goods and groceries in their stores at the end of the day doesn’t exclude the cost of their transportation to those stores.