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 ?
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".
If price of electricity is set by the commodity market as National Grid states, then these competitor companies must sell at a loss or they buy at other than the price set by the commodity market, suggesting that the notion of a price set by the commodity market is a guise to raise prices.
Traders can do appropriate costing and cover their purchases by making beneficial decisions trading in commodity market.
The commodity market has witnessed an increase in populairty among traders, especially being available through CFDs.
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.
Those investing in commodities are not typical of other commodity market participants.
This real world commodity market has caused senior manufacturing and sales executives many a sleepless night, as they try to find ways to be profitable with this state of affairs while conducting business in a lawful manner.
It has the potential to transform Indian commodity market in a way that will benefit more farmers across the country for their hedging requirements.

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