Notes on commodity exposure, P&L and risk

12 Aug 2026 · Ravi Chandra Nutakki

Why your four P&L measures disagree

Open MtM, Margin P&L, Closed P&L and Realised P&L will not agree with each other on any given morning. That is not an error. It is the point.

Each answers a different question. Open MtM values what you still hold at today's prices. Margin P&L is the structural margin your plant actually earns on conversion, from real inventory costs and yields. Closed P&L covers positions matched against sales commitments but not yet dispatched. Realised P&L is the ground truth on what has shipped and settled.

The trouble starts when four teams each quote one of them and call it "the P&L". Finance reports realised. Procurement watches closed. Risk watches open MtM. Operations wants margin. Everyone is right, and the weekly review becomes a reconciliation argument instead of a decision.

The fix is not picking a winner. It is calculating all four from one dataset every morning, so the differences are explainable rather than suspicious. When the numbers share a source, the conversation moves from whose number is right to what to do about it.

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5 Aug 2026 · Ravi Chandra Nutakki

The two-hour morning nobody budgets for

Ask a commodity risk team what time their day starts and the honest answer is often two hours before anyone reads a number.

Positions come out of the ERP. Broker statements arrive as PDFs and get keyed in. Trading system exports land in a shared folder. Someone consolidates all of it into a workbook, checks a few totals against yesterday, and only then does the first report go out.

By the time it circulates, the market has moved. The report describes a book that existed at seven in the morning, and decisions get made against it in the afternoon.

Nobody budgets for this. It never appears as a line item, and the people doing it are usually the ones who understand the book best, which is precisely why it is expensive. The cost is not really the hours. It is that your most experienced analysts spend their morning assembling data instead of interpreting it.

The work is genuinely necessary. It just does not have to be manual.

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