Latest Commodities News & Reports

uranium price

Uranium Spot Prices Run Out of Momentum

The uranium spot price rally stalled last week, ending the commodity's ascent that started in December after prices fell as low as $17.75 per...

Nickel Prices Tracking US Dollar

Nickel prices were lower Wednesday, even after the commodity fell under significant pressure in the prior session.While all the base metals faced some pressure...
Natural Gas

Natural Gas Prices Stabilize Following Tuesday’s Sharp Decline

Natural gas prices fell sharply on Tuesday, with the contract for April settlement on the New York Mercantile exchange losing in excess of 8%....

Although Currently Stable, Potash Prices Face Long-Term Pressure

While potash prices have stabilized and even started to rebound, spreading some cautious optimism across the sector, there are concerns that any significant increase...
gold

Gold Prices Consolidate Ahead Of Fed Minutes

Although the dollar weakened against the yen and there was defensive demand for bonds, the US currency secured net gains on a trade-weighted basis...
silver

Silver Prices Little Changed Amid Renewed Dollar Strength

Silver prices were in a holding pattern Wednesday, as the U.S. dollar continued to strengthen against a basket of major currencies ahead of the...
oil pipeline

Crude Oil Prices Soared for the Third Straight Day; U.S. Production Could Weigh

Crude oil prices soared in Asian trade on Wednesday, after a sharp rally in the last two consecutive sessions, buoyed by traders’ optimism over...
coffee prices

Arabica Coffee Prices Rise to Three-Week High, Brazilian Farmers Brace for Robusta Imports

Arabica coffee futures ascended on Tuesday for the fourth-straight session, with the latest upside coming from technical buying after the commodity breached a key...
natural gas

Natural Gas Prices Plummet

Natural gas prices imploded in today’s trading, with the contract for April settlement on the New York Mercantile exchange losing more than 8%. The...
crude oil
gold
silver
copper
natural gas
steel

Commodities are raw materials intended for use or consumption. There are three main commodity classifications: Agriculture commodities (often referred to as soft commodities), energy commodities, and metal commodities (referred to as hard commodities).

The most commonly traded commodities are crude oil, gold, silver, and copper.

How Are Commodities Traded?

Commodity markets can include physical delivery, referred to as a spot contract. Most trades, however, are carried out through derivative trading using futures, forwards, CFD’s, and options.

  • Futures contracts are carried out through regulated commodity exchanges. There are a number of international commodity exchanges; the world’s largest futures exchange is the Chicago Mercantile Exchange (CME). Other notable exchanges include the New York Mercantile Exchange, and the London Metal Exchange.

Futures contracts have been the most popular method of trading commodities. The introduction of CFD’s in the late 1990s popularized commodity trading as the usage of leverage was permitted.

  • CFD’s are now offered by most brokers, including brokers that focus primarily on currency trading. While the range of products offered on CFD trading varies from one broker to another, at a minimum, most will offer to trade in crude oil, gold, and silver.
  • Forward contracts introduce the element of time into the equation. The method has been commonly used in agricultural trading, to avoid fluctuations in price ahead of harvesting a crop. The forward contract would allow farmers to set the price on their crops in advance, eliminating risk as a result of price fluctuations. Trading on forward contracts has expanded outside of its original intended use, and contracts are now traded for speculative purposes in a broad range of commodities.

What are Commodities Correlated With?

As the US dollar is the largest traded currency in the world, there is a loose inverse correlation between the value of the dollar and commodity assets.

While the US dollar carries a correlation with the broader commodity market, individual currencies tend to have correlations with individual commodities. In the currency markets, resource-driven economies are referred to as commodity currencies. New Zealand, for example, relies heavily on their dairy trade exports, and therefore fluctuations in dairy prices stand to affect their economy, and as a result, stand to impact their currency. In Australia, copper exports have created a link between their currency and the commodity. Canada produces oil, and their currency carries a strong correlation with oil prices.

Metals have been defined as safe haven assets. During periods of market uncertainty, or what is commonly known as risk aversion, gold prices tend to go up. Risk sentiment shifts in the global financial markets are not the only influence on gold; the precious metal is also bought as a hedge during extended times of low inflation.

Factors That Affect Commodity Markets

In its most general form, supply and demand drive commodity markets. Individual commodity classifications and individual commodities are driven by different influences. Oil, for example, is sensitive to decisions made by the Organization of the Petroleum Exporting Countries (OPEC). Gold prices are influenced by risk sentiment and global inflation levels. The price of gold then influences other commodities under the metals umbrella.

Agricultural commodities are affected by seasonality patterns that can be related to weather conditions, which consequently affect supply. Global events and natural disasters can impact the commodity market, as an example, a hurricane in an agricultural-driven economy would simultaneously increase demand for gold while suppressing prices in agriculture commodities.

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