Latest Commodities News & Reports

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...
Natural Gas Storage

EIA Reports Natural Gas Inventories Rise 74 Bcf, Prices Still Advance

The latest Energy Information Administration (EIA) natural gas storage data recorded a build of 74 Billion Cubic feet (Bcf) for the week ending April...
baltic dry index cargo ship

Baltic Dry Index Down for Seventh-Straight Session

Capesize rates have finally turned higher. They snapped a six-session losing streak on Thursday, but the capesize index's turn higher wasn’t enough to buoy...
gold

Gold Prices Confined To Narrow Ranges, Trade Concerns Provide Support

Wednesday's US tax proposals did not have a major impact on gold, but there were concerns surrounding US trade policies which provided some net...

Potash Prices: Potash Corp’s Earnings Signal Market is Improving

Potash Corporation of Saskatchewan (NYSE:POT), the world’s largest fertilizer company by capacity, on Thursday announced first-quarter earnings that were double the result in the...
crude oil

Supply Concerns Continue To Undermine Crude Oil prices, WTI Hits 4-Week Lows

After rallying sharply following the inventories data, oil prices were put back under pressure by supply concerns, especially after the sharp increase in gasoline...
Silver

Silver Prices Break Seven-Day Skid After Trump Tax Bid

Silver prices steadied on Thursday, snapping a seven-day losing streak as investors digested President Trump's massive plan to overhaul the nation's tax system.July silver...
Natural Gas

Natural Gas Prices Rise Nearly 3%

Natural gas prices rose sharply in today's session, with the contract for June delivery on the New York Mercantile Exchange rising to the $3.26/MMbtu...
sugar prices

Sugar Prices Fall to One-Year Low

Raw sugar futures were substantially lower on Wednesday, failing to gain any support even as the commodity plunged to a one-year low. ICE raw...
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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