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What are Commodities

What Are Commodities?

What Are Commodities?

Metals

What Are Commodities?

Commodities are raw materials and primary agricultural products that can be bought and sold, such as aluminium or sugar.



There are several ways of classifying commodities. Soft commodities are those that are grown or bred; for example, wheat and cattle. Hard commodities are materials that undergo extraction; for example, gold or copper. Commodities are also categorised by investors into four groups: energy, metals, agriculture and meat and livestock:



- Energy: Including oil, natural gas, heating oil and gasoline.
- Metals: Including gold, silver, platinum, copper and aluminium.
- Agriculture: Such as food, such as cocoa, sugar, coffee, wheat and rice.
- Meat and Livestock: Such as hogs, live cattle and feeder cattle.


Commodities are traded very much in the same way as shares are and indices. To turn a profit, traders aim to sell a commodity at a higher price than the price they bought it for, or to buy a commodity back for less than it was initially sold.

What Influences a Commodity’s Price?

What Influences a Commodity’s Price?

Wheat

What Influences a Commodity’s Price?

Commodity price changes are primarily driven by whatever the current levels of supply and demand are. For example, if the supply of coffee rises, its price per unit will decrease. On the other hand, if demand for coffee increases, its price will see an increase too.


Economic factors, a shift in government policies and war can also have a major effect on commodity prices. In the case of agricultural commodities, for example, weather – both current and expected – can be a key driver of price volatility.


Natural disasters can also lead to movement in the commodity markets. For example, when floods in Thailand and Vietnam hit crops, the prices of vegetables and rice commodities rose in order to cope with the demands of major rice importers in Malaysia and Singapore. With events such as these having the potential to affect commodities, monitoring relevant international news can sometimes be key to making well-informed trading decisions.

Commodities Trading with ETX Capital

Commodities Trading with ETX Capital

Commodities Trading with ETX Capital

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A large range of commodity trading options are available in both rolling daily and futures formats with ETX Capital. Our tradable commodities (link to commodities trading page) include gold, silver, platinum, crude oil, sugar, oats, cocoa, rice, soybeans and wheat. Register (link to registration) on one of our platforms or for a free demo account (link to demo account) to start developing your trading skills today.

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