A trader who enters the market with the intent to protect a position in the underlying. An investor who uses futures market to minimize the risk in his or her business. Hedgers may be manufacturers, portfolio managers, bankers, farmers, etc.
A Hedger in the weather market is someone (a company, business or person) that wants to eliminate a financial exposure to movements in the weather. The hedge removes the adverse weather effect and so reduces the variability of future cash flow revenues.
A person who uses the markets to reduce the risk of his underlying position by undertaking a hedge. For example, a wheat farmer may sell wheat futures to guarantee him a fixed selling price for his wheat.
An individual or company owning or planning to own a cash commodity–corn, soybeans, wheat, U.S. Treasury bonds, notes, bills etc.– and concerned that the cost of the commodity may change before either buying or selling it in the cash market. A hedger achieves protection against changing cash prices by purchasing (selling)futures contracts of the same or similar commodity and later offsetting that position by selling (purchasing) futures contracts of the same quantity and type as the initial transaction.