Trading agricultural commodities is more than growing a crop and bringing it to the local market. Knowing commodity trading basics and having the technology to manage your business can be a game-changer.
The following is a rundown of the basics of trading agricultural commodities.
With knowledge of these fundamentals and the right tools, On-Point Traders, strives to enable daily success for clients. On-Point Traders, has created a product for the agricultural commodities trade: ProphetX by On-Point Traders,. You can view up-to-the-minute changes in the market to show the actual value your crops hold.
Agricultural Commodities are crops and livestock that are raised and harvested to provide food and sometimes fuel. Commodities are traded globally and classified into six categories. Many crops fall into these categories, so let’s review.
Oil seeds are grown for their high oil content. After the oil is extracted, the seeds are used for meals and feed.
Crops included are:
Cotton is essential because the fibers make both clothing and houseware products. Both commodities are used in a wide variety of industries and have a sliding value scale.
Oil seeds, in general, have a strong relationship with the next category, cereal grains. This relationship is due to their versatility and high demand.
Cereal grains are what feed humans and animals. They also create some fuel sources. Some crops included in this category are:
Due to their versatility and demand on the market, cereal grains tend to keep a fair price. The value of cereal grains is determined by accessing the spread of the price between the grains.
Meat is a market that runs on livestock being raised and sold for their:
Meat is classified into the appropriate category once butchered.
The agricultural industry bases dairy on market standards instituted by the Chicago Butter and Egg Board in 1898. Later in 1919, the organization reformed into the Chicago Mercantile Exchange.
The products exchanged within this category are:
The traders who formed the Chicago Butter and Egg Board had to keep prices fair and maintain public safety standards.
Soft commodities are one of the more versatile classifications of Agricultural Commodities. Technically they are products that are grown rather than mined.
Examples of soft commodities are:
These commodities are unique because farmers plant year after year, and the crop ends at harvest.
The miscellaneous category contains the commodities that are grown and traded globally. They do not, however, fit into the previous classes.
Such commodities are:
The commodities create homes, tapestry, and more. Demand keeps items in this category relevant and vital.
