KUALA LUMPUR | 07 September 2021
By Abd Ghani
A commodities exchange is an exchange, or market, where various commodities are traded. Most commodity markets around the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, palm oil, and metals).
A commodities exchange is a legal entity that determines and enforces rules and procedures for trading standardized commodity contracts and related investment products. A commodities exchange also refers to the physical center where trading takes place. … The most traded commodity future contract is crude oil.
A Commodity Exchange or Comex is a regulated market allowing the purchase and sale of contracts backed by commodities such as gold, silver, crude oil and so on. Such an exchange serves as the central location for trading the commodities.
A commodity exchange is an organized, regulated market that facilitates the purchase and sale of standardized contracts whose values are tied to the price of commodities – eg, corn, crude oil, or gold.
Commodity exchange has helped to enhance and promote large scale agricultural production. (ii) It has helped to stabilize the price of agricultural products. Prices are fixed to be executed in trading at a pre-determined period in order to mitigate the risks of fluctuation in price.
Commodities are often split into two broad categories: hard and soft commodities. Hard commodities include natural resources that must be mined or extracted—such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestock—such as corn, wheat, coffee, sugar, soybeans, and pork.
The most important of such services are as follows:
The exchanges provide a ready and continuous market for the purchase and sale of commodities. The producer is enabled to be independent of the middlemen. 2. By providing hedging facilities, the commodity exchanges reduce the effect of fluctuations in price.
One of the features of a commodity market is that its performance demonstrates an inverse relation with both stock and bond markets, as the bond and stock prices fall when the average price level of goods rise in the economy.
Tradable commodities are usually categorized into four basic groups: energy, metals, livestock, and agriculture. Among economists, there is little differentiation between a tradable commodity coming from one producer and the same commodity from another source.
Most traded commodities
A commodity is usually defined as a raw material used in the productive process or consumed on its own.
Top 10 Commodities
Most commonly traded commodities by group
Other lists group together agricultural products into one group
- Crude Oil and derivatives
- Coffee –
- Agriculture – Including wheat, corn, maize, oats, rice, soybeans.
- Animals and Animal Products – Such as live and feeder cattle, beef, frozen and fresh pork bellies, and eggs.
- Cocoa, butter, orange juice and sugar.
- Metals – Metals such as aluminium, nickel, copper, lead and ferrous scrap.
- Precious metals – The other commonly traded commodities are precious metals such as gold, silver and platinum.
- Plastic
- Natural Gas
- Bio-fuels
(Source: IG)
Soft Commodities include:
- Wheat
- Corn
- Soybeans
- Soybean Oil
- Soybean Meal
- Oats
- Rough Rice
- Cocoa
- Coffee
- Cotton
- Sugar
There there are livestock commodities like beef, pork and lamb
Energy Commodities include:
- WTI Crude
- Light, Sweet Crude
- Brent Crude
- Natural Gas
- Heating Oil
- Gulf Coast Gasoline
- Propane
- Uranium
Precious Metal Commodities include
- Gold
- Platinum
- Palladium
- Silver
Industrial Commodities include:
- Copper
- Lead
- Zinc
- Tin
- Aluminium
- Aluminium alloy
- Nickel Metric Ton
- Aluminium alloy
- Recycled steel
Other Commodities include:
- Ethanol
- Rubber 1 kg
- Palm Oil
- Wool
- Polypropylene
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