Companies face a price risk between when they manufacture a product and when the product is made available for selling. Similarly companies also face a price risk from the time lag between purchase of raw materials and its final selling. Hedging (using commodity derivatives) is one of the tools that can be used to minimize the risk arising from price volatility. But hedging in futures is not always a very straight forward process.The study involves understanding a corporate’s requirements — the commodity they are exposed to, their grade / quality, their delivery requirement dates and the type of payout cycle experienced by them.  Only then can an appropriate hedging strategy be formulated for them. But even best of hedging solutions can fail if they need to be suddenly squared off due to insufficient MTM funds. Hence when taking a futures position, one needs to get an idea of the approximate maximum MTM margin money that one might be required to pay. VaR margin can be used in this regard.