Commodity
Types – Trading Main Types of Commodities
It
is considered an attribute of a commodity, that it be traded in
significant volume in order
to help ensure pricing and stabilty. And thanks to the standardization of a
futures contract, parameters like specific grade and size (or ‘trading
unit’)
clear much of the fog from what is being traded with the commodity
itself forming
the underlying asset. The below lists many of the main commodity types:
Metals:
Metals are of two main types; precious and base metals. The precious variety
are gold, silver, platinum and palladium and CBOT is a standout exchange for
these
being traded. Base metals are aluminum, copper, zinc, lead, nickel and tin
and the London Metal Exchange is active in these markets. Gold and silver are
favorites
among many traders whenever global instability rears or to serve as
a store of value.
Energies:
When energies are mentioned, crude oil springs to mind. It is the number
one traded commodity in the world today. Certainly with a focus on dwindling
reserves,
and surging demand, it is easy to see why. Oil is traded on CBOT and NYMEX.
Though other energies are natural gas (especially for winter months heating,
with weather
playing a key role) along with coal, with many electricitry plants still coal-fired
for producing electricity, and with uranium a necessary fuel for making enery
for
use in nuclear
power plants (all NYMEX).
The biofuel ethanol trades both at the Brazilian Securities, Commodities, and
Futures Exchange and at CBOT.
Agricultural: Agricultural products are divided
into three main types of commodities; grains and oilseeds, softs and meats.
Grains would include wheat, rice, oats corn and
soybeans. Types of ‘Softs’, also known as ‘Food & Fiber’ include coffee, sugar,
cocoa, and orange juice (at CSCE) represented as abbreviated frozen - FJOC, type ‘A’ and
type ‘B’, then also there is cotton (NYCE – New York Cotton Exchange). Meats
include pork bellies, feeder and live cattle (adults) and hogs.
Many grains and softs are particularly sensitive to weather and temperature.
Such as frost and the Brazilian coffee tree and freezing termperature or mere
rumors even of Florida frost and its oranges.
The mini contract trades
on the Mid American Exchange, Chicago, for reduced quanties over the full size
contract -- one possible choice open to the beginner trader. Mini's
are available not only for corn, wheat and soybeans, but gold and silver as
well
(however,
in
reality, the mini may not trade in the same way as the full size contract).
Financials: The realm of financial
possibilities include U.S. treasury bonds, the S&P 500
indexes and foreign currency futures at the IMM – International Monetary
Market.
All in all, there is a diverse range of commodities to choose from. The
above lists main products however is not comprehensive in nature.
