In most cases, futures markets are utilized to diminish exposure to price risk because they represent supply and demand for a typical grade of available and deliverable commodities. Futures markets cannot, however, be used to moderate differentials risk because such risk is attached entirely to the type, quality or origin of specific commodities.

Differential risk and exposure are nearly always less great than underlying price risk. For this reason, the capability of the futures market to reduce such risk is an essential management tool. Differential risk should never be ignored or written off, and review of historical differentials for the same or similar products is often a wise course of action.