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 ?
Energy prices are recovering in response to steady demand and falling stocks, but much depends on whether oil producers seek to extend production cuts," said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook.
This is because the major corporations and financial market investors are using cheap capital to mount a comeback of their pre-crisis positions through investments on financial and commodity markets (Warwick-Ching, 2013), whereas the governments assumed they would allocate it for investments beneficial to economic growth.
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.
said, "While stock markets are "huge local", commodity markets are "little global".
We are looking to contribute towards this growing number, by constantly enhancing and expanding our services in the commodity market," he added.
In financialized commodity markets, as in currency markets, intervention may even make it easier for market participants to recognize the fundamentals," the report alleges matter-of-factly, claiming that "it is possible for a central bank or another agency to engage in the financial markets as a market maker or as the one institution that is able to shock the market when it overshoots.
We would stress that commodity markets remain fragile.
DME/AUD Academy Host Seminar On Commodity Markets and Professional Trading TechniquesDelivered insights in to the fundamentals of energy marketsThe Dubai Mercantile Exchange Limited (DME) recently held a C[pounds sterling]Commodity Markets and Professional Trading TechniquesC[yen] seminar, delivered by the DME/AUD Academy, and held at the American University, Dubai.
Reed noted that Chinese demand is increasingly driving world commodity markets and has formed the joint venture to facilitate ongoing trade with China.
More recently, speculators have taken a much greater stake in commodity markets.
Classic economics says that pure commodity markets operate on a supply/demand curve model, with higher demand created by lower prices and higher supply created by higher prices.
MARKETS TO CLOSE: Stock and commodity markets will be closed today in the United States and many other countries in observance of Good Friday.

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