Commodities are products that can be consumed in the raw form and commodity trading has been going for centuries. Commodity trading markets have a huge impact on businesses, society and individuals. Shortages of important commodities have also led to few wars. Many commodities are monitored by organizations and countries.
The importance of commodity trading business have increased and taking this in mind many new commodity trading companies have opened their doors to make profits by capitalizing on the situation. Commodity trading company manages everything from start to finish and help you if you are new to commodity trading business.
Types of Trading Commodities
There are four major types of commodity trading
- Energy Fuels
Precious metals such as gold, silver, platinum and many others come under this category of commodities. Many factors are involved in fluctuation of price of precious metals. Countries that have mines of precious metals export these metals to different countries and earn lot of foreign exchange. Prices of gold are directly linked to the prices of oil.
Different types of oil and gas which are used to produce energy are also traded commonly in international market. Any kind of unstable condition around major oil and gas producing countries will lead to a sharp increase in prices of oil and gas. With such fluctuations, it affects the many industries because they are the wheels of the industry. They need fuels to run factories. Many countries fight for getting hold on energy fuel resources and war can broke out because of oil.
Animals, cattle, meat, dairy products or simply animal products comes under this livestock category of commodities. Many countries that are rich in livestock also trade livestock with other countries.
All the cash crops such as rice, wheat, cotton cocoa are some of the example of agriculture commodity. Agricultural country exports their surplus productions of agriculture commodities to other countries that cannot produce them in their country due to unfavorable conditions. Agricultural country will earn most of their foreign exchange through export of agricultural commodity.
If you are new to commodity trading, then you need a mentor to save you from bearing heavy losses early in your international trade business career. There is risk involved in commodity trading and people who are unaware get hit hard. The main reason is that prices of commodities depend on the events that take place globally and these events are very hard to predict. These include harsh weather conditions, natural disasters, warfare, epidemics etc. It can complete change the landscape of international trade within few days.