Pros And Cons Of Commodity Markets

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1. Commodity Trading Commodity Market • Commodity market is a place where trading in commodities takes place. These are the markets where raw and primary products are exchanged. • These raw commodities are traded on regulated commodity exchanges, in which they are bought and sold in standardized contracts. It is similar to an equity market, but instead of buying or selling shares one buys or sells commodities. Categories of trading commodities • Energy (including crude oil, heating oil, natural gas and gasoline) • Metals (including gold, silver, platinum and copper) • Livestock and Meat (including lean hogs, pork bellies, live cattle and feeder cattle) • Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar) How to trade in commodities (i) Commodity Futures A standardized agreement to buy (or sell) an asset in the future, at a price…show more content…
Commodity Derivatives: An Introduction Commodity derivatives markets have been in presence for a considerable length of time, driven by the endeavors of producers, users and speculators(investors) to deal with their business and financial risks. Producers need to deal with the exposure to changes in the prices they get for their commodities. They are generally centered around accomplishing the same impact as fixed prices on contracts to offer their produce. End-users want and need to fence the costs at which they can buy commodities. A clinic framework might need to alter the cost at which it buys power for air conditioning during the summer. An aircraft needs to secure in the cost of the jet fuel it needs to buy in order to manage the peak season demand. In the meantime, investors and financial intermediaries can either buy or sell commodities using derivatives. They put capital that is crucial to encouraging the business of the producer and of the end-user. They stand prepared to execute with these market participants; without them, producers and end-users couldn't fence their

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