Global Commodity Trading
Basically, commodity markets are the one in which raw or the day to day products are exchanged. The main thing is standardization of process of trading i.e. there are contracts for this kind of trading. Global trading is trading between two or more nations i.e. not all nations extract or grow all commodities and hence this kind of system is used.
The history and past experience of professional has always shown that Commodities market and trading had the major impact on the financial status of a country. The history is unknown but China had started with the commodity trading around 6,000 years ago and the commodity was Rice. The observations also shows the main reason for World War II was sue to Japans venture into many alienate countries for commodities like secure oil and rubber just because of shortage of that commodities. Also over growth of certain commodity may result in the reduction of price of that commodity.
Crude oil i.e. energy commodity are kept under surveillance by all countries, corporations and organizations which are related. The high crude oil price may affect the Western countries on the other hand the Middle East countries which are dependent on the petroleum as their daily bread are heavily affected by the decrease in the crude price. The things that can affect the commodities the most are devastations caused by the weather like heavy rain or cyclone and some natural disasters like earthquakes or volcanoes. Some times they also cause region wise food shortages.
The commodity trading is divided into 4 basic categories which are as follows:
- Energy commodity which includes natural gas, gasoline, crude oil, etc.
- Metal commodity which includes silver, gold, platinum, copper, etc.
- Livestock and Meat commodity which includes pork bellies, cattle, feeder cattle, lean hogs, fishes, etc.
- Agricultural commodity which includes all the farming products like cotton, soybeans, wheat, rice, coffee, sugar, etc.
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