Latest Commodities News & Reports

crude oil pumpjack

Crude Oil Prices Weekly Forecast September 18-22

Coffee Prices: Robusta Falls as Speculators Exit Positions

Robusta coffee futures, which have been well supported for months due to razor-thin supplies fell on Friday due to a round of speculator selling...
uranium price

Uranium Prices: Uranium Demand Growth Will Be Slow

In the World Nuclear Association’s latest (biennial) report, World nuclear capacity will grow dramatically in the coming years, but stockpiled uranium will mean it...
cargo ship baltic dry index

Baltic Dry Index Climbs to 34-Month High

The Baltic Dry Index finished the week on a positive note, adding 24 points to reach 1385, its highest price point since November 2014....
gold price bar

Gold Prices Resist Selling Pressure, Global Growth Hopes Limit Support

Gold has edged lower, although overall selling pressure has still been limited with the dollar unable to gain traction against European currencies. There are...
Silver

Silver Prices Edge Lower After North Korea Missile Test

Silver prices edged slightly lower on Friday, as investors reacted to the latest provocation from North Korea.Silver futures for December deliver slipped 3 cents,...
oil tanks with oil tanker

Demand Hopes Continue To Boost Crude Oil Prices, COT Data In Focus

Crude prices have maintained a firm tone during the past 24 hours with further optimism surrounding the outlook for global growth boosting confidence in...
steel prices

Steel Prices: China’s Steel Output Reaches Another Record

China’s steel production hit another record in August, as steel producers ramped up their output due to improving margins and an expected environmental crackdown...

Potash Prices: Canadian Regulators Approve Potash Corp/Agrium Merger

The Canadian Competition Bureau has put its stamp of approval on the Potash Corporation of Saskatchewan and Agrium merger, but the tie-up may still...
copper tube pipes

Copper Prices: Metal Continues Pullback

Copper, which has been one of the surprise positive performers this year, fell under some pressure this week. On Thursday, the red metal closed...
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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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EUR/USD Weekly Forecast September 18-22

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USD/JPY Set To Close The Week With The Largest Gain In 10 Months

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