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Learn More about Commodities trading

Let’s know more about Commodities trading, their records and Commodity Trading Methodology in details just read this article.

Commodities trading

In short, There is a difference between Forex Trading and Commodities but today we choose to talk about commodities by details. 

goods are hard commodities that range from gold to wheat to coal.
In the Commodity Exchange Act of 1936, the U.S. government defines goods.

The Act covers the trade in commodities from agriculture and natural resources.

While the Act treats financial products as goods, they don’t think it’s commodities.

The Act also prohibits the commerce of onions as commodities, Public law 85-839 pursuant to 1958.

Record about Commodities trading

In short, since so many commodities are available, three key classes are classified such as metals, energy and agriculture.

Agricultural commodities trading are such as the following examples:

  • You’re drinking things like sugar, cocoa, coffee and orange juice.
    This is known as the softs.
  • Things like cotton and lumber you wouldn’t eat.
  • Grain, like wheat, soya, soya oil, rice, oats, and maize.
  • Animals include live cattle and anything that category as meat.

The category energy covers crude oil, RBOB petrol, natural gas and fuel oil.
Commodities trading is a major determinant of oil prices.

Metals include mining products, such as gold, copper, platinum and silver.

The London Metal Exchange has announced that it is launching battery future metal contracts starting in this year 2019.

The company expects a large market for metals as the demand for electric vehicles rises.

Commodity Trading Methodology

In short, trading in commodities determines all commodity prices.

The costs of the most important items you use are often unpredictable on a daily basis.

They change in some cases from day to day, such as gasoline.

Commodity markets on an open exchange.

The rates, therefore, adjust every day.

For consumers who face price fluctuations in everyday products such as petrol, food and grain, these can be difficult.

It especially affects the world’s poorer people, who pay more for food and transportation of their limited income.

It also makes production more dangerous.

This is a reason for providing agricultural subsidies from the US government.
Gas, gold and agricultural goods are the largest amount of trade.

Because nobody needs heavy goods transport, instead, they are trading future agreements.

Such contracts are to bought or sold at an agreed price on a particular date.

Contracts for commodities are in US$.

So when the dollar increases in value, the buying of the same amount of goods needs fewer dollars.

This reduces the price of products.

Financials

In short, Financials in the future markets are also traded.

These include the euro-dollar, the euro-FX, and currencies for three months.

It also contains interest rates, like the Treasury note for ten years.

Futures on stock indices like the S&P 500 are also available.

But this is not classified as commodities by the Commodity Exchange Act.
Chicago, New York and Atlanta are the U.S. commodity markets.

Everything in the CME Group is one.

The trade-in Chicago focuses on agricultural goods, while the grain is a specialist for the Chicago Board of Trade.

The New York Exchange concentrates on energy and metals, while the New York City Commodity Exchange, even if they are owned by CME Group, based in Chicago.

The New York Chamber of Commerce now owns the Intercontinental Exchange, which is based in Atlanta.

It primarily trades in the softs.

In 1975, commodity rules began to regulated by the Commodity Futures Trading Commission.

The Commodity Exchange Authority and the Commodity Exchange Commission have been replaced.

Such bodies were established by the Commodities Exchange Act in 1936 to enforce the Act and impose federal trading restrictions.

Source: Investopedia

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