Commodities
Some commodities have special advantages that make them suitable for investment to the point of creating specialized markets, such as stock exchanges, so we hear of the New York Cotton Exchange, another gold in London, a third of coffee in Brazil and a fourth of tea in Sri Lanka ... etc. Commodity markets are dealt with by special restrictions called 'future commitments', a contract between two parties, the producer of the commodity and an agent or broker, in which the producer undertakes to deliver a certain quantity to a certain date in the future in exchange for insurance or Coverage shall be determined by a certain percentage of the contract value.
when speaking about commodities, we mean the asset classes that describe raw materials and natural resources that can be made available as standard and negotiable. Examples include:
- Metals such as iron ore, aluminum, silver or gold
- Food commodities, such as wheat, rice, sugar, salt, coffee, and soybeans
- Energy commodities, such as oil, coal, natural gas and electricity.
Light commodities or goods that is being cultivated, while 'hard goods' are goods which are extracted through mining. Electricity has certain characteristics and is generally uneconomical in storage.
Dealing with market as commodity units' equivalent value (or so), ignoring the source of production. For example, there is only a slight difference between each barrel of crude oil barrels, regardless of vendor or product per barrel. There may be a slight difference in quality, but essentially, they are both regarded as the same product.
We cannot taste the wheat figure out who produced it, Rossi, or French or English capitalist farmer. (Karl Marx, critique of political economy 1859).
Examples of products that cannot be regarded as a commodity, tv sets. Where each aspect distinguishes it from others, such as brand, perceived quality or user interface. So, it may be a particular tv demand higher or much lower than demand on another tv.
Trading Goods:
The usual pricing for the commodities is US dollar. Thus, if your trading account is denominated in a currency other than us dollars, you will have to learn that exchange rate fluctuations will affect the outcome of your trades.
Goods can be traded through contracts for difference (CFDs) have many brokerage firms.
Commodities and Forex market:
There are a number of countries whose economy depends heavily on exporting goods such as Australia, Brazil and Canada. Influenced by those countries ' currencies always change in commodity prices. For example, Australia is one of the leading exporters of gold. So, when the gold price rises, the market needed more Australian dollars to buy gold is what drives the price of the Australian dollar to rise.