Latest Commodities News & Reports

Natural Gas

Natural Gas Prices Test 50% Retracement of Decline from April High

Natural gas prices have maintained an upside bias throughout the majority of the week. The contract for June delivery on the New York Mercantile...
uranium price

Uranium Prices: Cameco’s Results Disappoint

Just as optimism started to hit the uranium market, Cameco Corporation's released its first quarter results on Monday - and they were a huge...

Nickel Prices: Trading Quiet Following Commodity’s Fall to 10-Month Low

Nickel trading was quiet Friday, with the metal holding fractionally lower on lighter trading volume. Still, price wise it was an eventful week for...
sugar prices

Sugar Prices Rebound Following Collapse to Year-Low

Raw sugar futures were in rebound mode Friday, for the second-straight session, after the commodity’s plunge to a year low enticed some investors back...
fine gold prices bar

Gold Price Maintains Tight Range, No Disruption From US GDP Data

A solid tone in risk appetite and higher bond yields has curbed demand for gold, although the main feature has again been narrow ranges...
oil tanker

Crude Oil Prices Recover Ground, Sentiment Remains Fragile

Oil prices have recovered from the 4-week lows recorded on Thursday, although underlying sentiment remained notably cautious due to underlying supply concerns.Crude prices...
silver prices bullion

Silver Prices on Track for Second Straight Weekly Drop

Silver prices rose Friday but were on track for large weekly declines, as precious metals fell out of favor with investors after the first...
Natural Gas Storage

Natural Gas Prices Fail to Follow Through on Wednesday’s Gain

Natural gas prices rose sharply on Wednesday, with the contract for June delivery on the New York Mercantile Exchange rising to the $3.26/MMbtu level,...
coffee prices

Coffee Prices See More Downside Even After Recent Free-Fall

Arabica coffee futures were lower again on Thursday, and reached $1.2912, down nearly 1% for the session. Arabica coffee futures started a sell-off last...
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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US Dollar Index (DXY) Modestly Lower After Release of US GDP

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