What is the commodity market?

The

commodity market is a global supply and demand for non -differentiated materials. The commodity is any item that is the same regardless of its origin. Things such as raw metals, textiles or electricity are the same all over the world, no matter who mines, produced or generated. Because all these items are essentially the same, they can be exchanged independently of origin. The commodity market is also the primary place where these commodities are exchanged. Raw materials such as oil and agricultural products such as soybeans and sugar are the largest part of the commodity market. Livestock animals, as well as cattle and pigs, form the smallest part, as well as electricity, cotton substance and ethanol. Some common materials, such as milk, do not discover commodities because the price and source of milk differ significantly from area to area. As a rule in one area of ​​the world, it increases, which increases demand in the entire global market. This in turn causes an increase in the price. When demand falls, it also reduces the price around the world.

Individual items sold in the commodity market are common in many produced goods. As the price changes, this will increase or reduce the cost of the material produced corresponding to. This market also indirectly affects goods in the case of commodities such as ethanol. As the price of ethanol rises, more food material goes into its production; This reduces the supply of raw food goods and increases finished food prices.

Purchase and sale of commodities is primarily held in the global commodity market. These markets are similar to the stock exchange, with the exception of pieces of the company, brokers sell pieces of commodity. Brokers sell commodity amounts from Genural Pool; The real source of commodity is quite unimportant for this process. Each of these markets is connected, so the tip on one market will have almost immediately a global answer.

These sales are generally in something called "futures". The future is a guarantee that the buyer's hairA specific amount of individual commodity, which is the amount to be delivered in the future. The aim is to buy the future with the hope that demand will cause price increases and then will be sold for a larger amount. If the supply surpasses demand or if the supply cannot meet the amount of futures sold, the investor may eventually lose a large amount of money.