COMMODITIES EXPLAINED
Commodities are a fundamental part of our daily lives. Their value adheres to the basic economic principles of supply and demand. When there’s a shortage in supply, demand rises, and this increase in demand pushes up the price of the commodity. Conversely, an excess of a commodity can drive down its value.
Supply shortages can be triggered by natural disasters or political conflicts. For example, when wildfires threatened Californian vineyards, the price of grapes surged. On the other side of the equation, global economic development and technological advancements also influence prices.
As an example, the emergence of China and India as significant manufacturing players has led to a reduced availability of industrial metals like steel for the rest of the world.
HOW IT ALL STARTED
Commodities have a long history predating stocks. Going back to the earliest civilizations, historical evidence shows that these ancient societies traded various commodities. Many people recall learning in high school history class about the importance of trade routes. Trading among these ancient cultures was vital for their survival and growth.
Commodity trading was a cornerstone of their economies. Different kingdoms and controlled territories rose and fell based on their ability to create and manage complex trading systems. To thrive, any society looking to avoid extinction had to establish a functioning commodity exchange. This exchange fueled economic development and allowed for taxation, resulting in profits. Even today, commodities remain a crucial part of both the US and global economies. Most recently, trade discussions between the US and China have garnered significant attention, underscoring the importance of commodities in today’s global economic landscape. The continued growth of the Chinese economy, for instance, has significantly impacted the value of steel.
We’ve been involved in the commodity trading business since 1982, amassing over 37 years of experience. Some individuals might hesitate to enter the commodity markets due to a lack of understanding. However, we guide our clients through every aspect of commodity trading. Our knowledge, experience, and resources encompass the complexities associated with commodities, ensuring that your investments yield a healthy return. If you have any questions, please don’t hesitate to contact us.
TYPICAL COMMODITIES
Commodities can be categorized into four main groups:
- Metals: This category includes precious metals like gold, silver, platinum, and copper.
- Energy: It encompasses commodities such as crude oil, heating oil, natural gas, and gasoline.
- Livestock and Meat: This group includes lean hogs, pork bellies, live cattle, and feeder cattle.
- Agricultural: This category comprises commodities like corn, soybeans, wheat, rice, cocoa, coffee, cotton, and sugar.
Ready to trade?
Opening an account is straight forward.
Apply today, you’ll be allocated a trader so you can start trading instantly.