Know How Commodity Futures Trading Related to Commodity Prices

RELATIONSHIP BETWEEN COMMODITY FUTURES TRADING AND COMMODITY PRICES At the beginning of 2016, the world’s economic growth grew at a slower pace because of the lack of productivity when it comes to developing commodities. Moreover, a labor market shortage develops which hampers down the economy itself. However, in the last quarter of 2017, the world saw the improvement that indicates a recovery in the world market.

WHAT IS COMMODITY BASIS? Basically, commodity basis is the raw materials that make up agricultural goods manufactured for transport from one place to another. While the commodity future trading is a kind of platform that facilitates in various commodities whether the price of a certain good goes up or down. The market itself has a strong impact on the economy both historically and currently.

TRADING COMMODITIES Commodity physical trading goods can be divided into four categories. One is the energy which includes the oil, heating oil natural gas, electricity, gasoline and coal. Two is Metal which includes, gold, copper, metal, silver, and platinum. Three is the livestock and meat which are traded offshore like feeder cattle, pork hogs, live cattle and meal prices. And finally, the agricultural goods like rice, cocoa, coffee, sugar, soybeans, and corn.Â

STARTING COMMODITY FUTURE TRADING To anyone who wants to venture into this kind of industry, it is highly recommended to best to stick with commodities which already possess the basic industry knowledge. Whether you like it or not, all have a reasonable knowledge of at least 1 commodity.Â

LOOK CLOSER ENOUGH The best commodity traders are the one who looks close enough to the anticipated movement of the market. The trading market information itself need insight to the economic growth and as well as politics and banking system. Going back to trading oil, for example, requires a sense of logical economy knowledge between the demands of the goods and the stock itself.

RISK Some of the top commodity trends, however, can quickly become risky because it may affect eventualities if not impossible to predict like unusual weather pattern and manmade disaster. For example, the veg oil prices, in the US was affected because of the severe winter. Nebraska drops its supplies that affect the price. Therefore it is wise to predict when large price movement occurs so one can allocate the assets in the market.

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