Notices

Commodity

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Definition:
In trading terms, any of a number of tangible products which are traded via the futures market.


Contents

[edit] Categories of Commodities

|Metals

|Energy


The above are the commonly traded commodities. The Commodity Research Bureau (see the CRB Index) also provides the following groupings:

Metals: Copper scrap, lead scrap, steel scrap, tin, and zinc.

Textiles and Fibers: Burlap, cotton, print cloth, and wool tops.

Livestock and Products: Hides, hogs, lard, steers, and tallow.

Fats and Oils: Butter, cottonseed oil, lard, and tallow.

Raw Industrials: Hides, tallow, copper scrap, lead scrap, steel scrap, zinc, tin, burlap, cotton, print cloth, wool tops, rosin, and rubber.

Foodstuffs: Hogs, steers, lard, butter, soybean oil, cocoa, corn, Kansas City wheat, Minneapolis wheat, and sugar.

[edit] How Commodities Trade

There are two primary markets for commodity trading. The cash market is the one between producers (farmers, mining companies, oil drillers, etc.) and users (food manufacturers, jewelry companies, refineries, etc.). It is what could be considered normal business trade.

The futures market is what most traders think of when discussing commodities trading, as it is where speculators operate. The commodity futures markets, however, were formed to allow producers and users the opportunity to hedge.

[edit] Commodity indices

There are two primary indices which track baskets of commodities. They are the Commodity Research Bureau Index (CRB) and the Goldman Sachs Commodity Index (GSCI). Both are trable via the futures market.

[edit] New York Exchanges

[edit] Chicago Exchanges

[edit] London Exchanges

[edit] Commodities Price Influences

Commodity prices are a function of supply and demand. As such, they are impacted by anything which will impact the production, distribution, or need/desire for them by consumers. This include things like:

  • Weather
  • Production problems
  • Labor issues
  • Disease (mad cow, crop blights, etc.)
  • Natural disasters


[edit] T2W links

[edit] External links