Hedging import commodity prices for BRICS nations

BRICS nations have recently witnessed substantial increases in core import commodity prices that portend the possibility of significant, non-transitory inflation and all that would occasion. This paper suggests a lower-cost alternative for hedging import commodity prices. The hedging instrument examined here exploits the negative correlation between commodity output and price witnessed for normal goods. This paper provides a valuation formula for the instrument and demonstrates its ability to more effectively minimize an importer's value-at-risk when quantity uncertainty prevails.