Importance of Commodities

Some raw materials are especially relevant in economic activity. He Petroleum, sugar, gold, coffee, copper, coal, rubber or wood are examples of basic materials that are linked to different commercial uses. These are products that are made by man and that are normally presented in generic form. These and other basic goods can be used to negotiate in the financial markets and when this happens, these goods are called commodities.

Professional traders trade commodities on a regular basis

When we think of the bag of values A series of entities comes to mind, such as multinationals, banks, investment funds, etc. Also, they are part of the different international stock markets.

Those who negotiate with these goods know that they are very volatile products, since their price changes depending on many factors (for example, a good or bad corn harvest becomes a determining factor in negotiating a price).

Like any other financial product, this one also carries some risks. There are risks related to transportation, commodity logistics or payment methods. Price volatility is another risk in these operations (if the price of the commodity falls, a buyer might consider breaking the contract and looking for a more affordable transportation system. cheap).

Commodity trading is a very specialized sector.

Analysts must know the upward or downward trend of each commodity and be well informed about the demand in the market of each of these goods.

If the good is scarce, its price tends to increase and, conversely, if the good is abundant, the price tends to decrease.

The transactions that are carried out take place in two types of markets: the spot market and the futures market (the The first refers to the current price of a product and the second refers to the expected price of a product).

In specialized terminology, we talk about soft and hard commodities.

The former are mainly corn, coffee or soybeans, while the different metals are examples of the hard modality. In the financial system it is possible to acquire these basic goods depending on their price and the quantity purchased.

Depending on the supply and demand of each commodity, anyone can buy or sell any of these goods. by contacting an intermediary who carries out the operations between the person concerned and the market financial. Trades and brokers offer platforms to their clients so that they can acquire the commodity they want.

Fotolia images: Hramovnick, Zdenek