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Commodity-Futures
Commodity-futures is a contact to buy or sell a specified amount of an article or product – unprocessed or partially processed good such as grain, metals, and fuel at an agreed upon price set on specific date in the future.
Learn Commodity-Futures-Trading Insights of the Experts
If the price of the commodity rises between the contract date and the future date, the investor will make a profit. If it declines, the investor will lose money. A form of commodity-futures-trading began in 17th century Holland with the trading of tulip bulbs. Futures trading as we know it began in 18th century Japan with the trading of rice and silk. Trading in the U.S. started in the mid 19th century, when central grain markets were established and a marketplace was created for farmers to bring their products and sell them either for immediate delivery (also called spot or cash market) or for forward delivery. These forward future contracts were private contracts between buyers and sellers and became the forerunner to today's exchange-traded futures contracts. Although contract trading began with traditional commodities such grains, meat and livestock, exchange trading has expanded to include other products and services – energy, metals, currencies, equities and equity indexes, private interest rates and government interest rates. In the 1970s the Chicago Mercantile Exchange(CME) introduced contracts on financial instruments. These instruments became successful and soon superseded the trading volume of commodities futures. With the introduction of this innovation new futures exchanges were created. Today, there are more than 75 futures and futures options exchanges operating worldwide. They include the following: • CME Group (formerly CBOT and CME) -- Currencies, Various Interest Rate derivatives (including US Bonds); Agricultural (Corn, Soybeans, Soy Products, Wheat, Pork, Cattle, Butter, Milk); Index (Dow Jones Industrial Average); Metals (Gold, Silver), Index (NASDAQ, S&P, etc) • New York Board of Trade - softs: cocoa, coffee, cotton, orange juice, sugar • New York Mercantile Exchange - energy and metals: crude oil, heating oil, gasoline, natural gas, coal, propane, gold, silver, platinum, palladium, copper, and aluminum. • Tokyo Stock Exchange - TSE (JGB Futures, TOPIX Futures) • Tokyo Commodity Exchange - TOCOM • Tokyo Financial Exchange - TFX (Euroyen Futures, OverNight CallRate Futures, SpotNext RepoRate Futures) • London Commodity Exchange - softs: grains and meats • Osaka Securities Exchange - OSE (Nikkei Futures, RNP Futures) • ICE Futures - International Petroleum Exchange trades energy including crude oil, heating oil, natural gas and unleaded gas and merged with IntercontinentalExchange(ICE)to form ICE Futures. • Euronext.liffe • Sydney Futures Exchange • Dubai Mercantile Exchange Singapore International Monetary Exchange -(SIMEX)
Futures Traders Futures traders are traditionally divided into two groups: Hedgers -- Have a specific interest in the commodity and are seeking to hedge the risk of price changes. Hedgers typically include producers and consumers of a commodity. Farmers for example often sell futures contracts for the crops or livestock they produce to guarantee a certain price. This makes it easier for them to plan ahead. Likewise, livestock producers often purchase futures to cover their feed costs. Speculators -- Seek to make a profit by predicting market moves and buy a commodity "on paper" although they may not have any practical use for it. Commodity-futures markets are popular due to their ability to transfer risk and increases liquidity between between traders with differing time and risk constraints.
In addition to Commodity-Futures,
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