commodity market

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commodity market,

organized traders' exchange in which standardized, graded products are bought and sold. Worldwide, there are more than 20 major commodity exchanges and many smaller ones that trade commodities, ranging from grains and beans, coffee, tea, and cocoa, and cotton and wool to precious and industrial metals, oil, electricity, and plastics. Most trading is done in futures contracts, that is, agreements to deliver goods at a set time in the future for a price established at the time of the agreement. Futures trading allows both hedginghedging,
in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market.
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 to protect against serious losses in a declining market and speculationspeculation,
practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings.
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 for gain in a rising market. For example, a seller may sign a contract agreeing to deliver grain in two months at a set price. If the grain market declines at the end of two months, the seller will still get the higher price quoted in the futures contract. If the market rises, however, speculators buying grain stand to profit by paying the lower contract price for the grain and reselling it at the higher market price. Spot contracts, a less widely used form of trading, call for immediate delivery of a specified commodity and are often used to obtain the goods necessary to fulfill a futures contract. An independent U.S. regulatory agency, the Commodity Futures Trading Commission was established in 1974 to regulate commodity markets. In 1982, the Chicago Mercantile Exchange introduced a futures contract for Standard & Poor's 500 U.S. companies that allows investors to speculate on the future prices of those stocks. Trading of S&P 500 and other financial futures has broken down some of the barriers that once separated stockstock,
in finance, instrument certifying to shares in the ownership of a corporation. Bonds are similar evidences of shares in a loan to a corporation. Stock yields no dividends until claims of bondholders have been met.
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, bondbond,
in finance, usually a formal certificate of indebtedness issued in writing by governments or business corporations in return for loans. It bears interest and promises to pay a certain sum of money to the holder after a definite period, usually 10 to 20 years.
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, and commodity markets and made it easier for investors to hedge their stock investments. Critics charge that the futures trading at the commodity markets in Chicago has made stock prices more volatile.
References in periodicals archive ?
It said it plans to start trading in Fukuoka in May, after moving its commodity market and planning section to a new building currently under construction in the city.
Recognizing the unique needs for commodity market forecasting and the incredible value to be captured by operating companies who frequently make high value decisions, the co-founders sought to build a platform applying innovative analytics to these segments.
In author and seasoned commodity trader Carley Garner's quest to guide traders through the process of commodity market analysis, strategy development, and risk management, "Higher Probability Commodity Trading" discusses several alternative market concepts and unconventional views such as option selling tactics, hedging futures positions with options, and combining the practice of fundamental, technical, seasonal, and sentiment analysis to gauge market price changes.
Sebi has the resources to bring in people and develop the required infrastructure to improve the functioning of the commodity market and work on its expansion.
Our successful track record with the DME Oman crude oil futures contract means that DME has the credibility in the commodity markets in order to attract a wide variety of participants and commodities to the DME Auction platform over the long term".
This email states in part, "Energy supply prices are set by the commodity market, not National Grid.
Commodity Market Size(BiIlions of dollars) Commodity Total Sales Trading Futures and in Spot Volume in Options Market Futures and Market Open (Annual) Options Interest Markets (Monthly) West Texas Intermediate (WTI) $2,500 $2,800 $279 and Brent crude oil Live cattle CME 1,500 76 21 Heating oil and gas oil 800 982 74 Unleaded gasoline 705 318 33 Gold 182 2,067 145 Silver 21 369 30 Zinc 27 1,910 13 Copper 144 1,228 58 Aluminium 89 484 47 Corn 104 291 64 Wheat CBOT 165 61 17 Soybean 120 375 55 Totals 6,357 10,964 835 Source: Barclays Capital.
ForexMinute provides live quotes for several commodity market symbols which include Gold, Crude Oil, Silver, Natural Gas, US Soybeans and US Wheat.
They also reflect the commodity market's expectation of secular population growth and its impact on the ability of producers to meet future demand.
India, a commodity based economy where two-third of the one billion population depends on agricultural commodity, surprisingly has an under developed commodity market. Unlike the physical market, futures markets trades in commodity are largely used as risk management (hedging) mechanism on either physical commodity itself or open positions in commodity stock.
Erb and Harvey (2006) note that the annualized return of Commodity Market Index (Goldman Sachs Commodity Index (GSCI)) outperformed the Equity Market Index (S&P 500) total return with returns of 12.2% for the period December 1969 to May 2004.

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