Cannon Trading Blog

In July 2017, Forbes¹ predicted an “explosion” of activity in commodities trading, and that prediction may have been right on the money; a bullish U.S. commodities market recently danced from summer to fall. As of September 5 2017, energy and non-energy commodities saw a respectable gain, but metals, minerals, and precious metals jumped as high as 8.2 percent. All that glitters is not gold; maybe it’s iridium! And maybe it’s time you learned about commodities trading as an investment strategy.

What are Commodities and Commodities Trading?

In the U.S., futures and option markets are regulated by the Commodity Futures Trading Commission. A commodity is a product that can vary in quality or grade. However, a futures contract of a commodity product is standardized, regardless who is the producer/seller. In addition to energy (oil and fuel, gasoline and natural gas), other commodities trading items include:

• Agro-based (cotton, corn, lumber, oilseeds, wheat, etc.)
• Livestock (cattle, chicken, pigs and pork bellies, etc.)
• Metals (aluminum, copper, nickel, zinc, etc.)
• Precious metals (gold, iridium, platinum, rhodium, silver, etc.)
• Soft – These products are grown and harvested rather than mined (Cocoa, Coffee, Fruit, Soybeans, Sugar, etc.)
• U.S. Equities

The commodities market is driven by supply and demand. You can try to predict, based on previous years, what this year’s cotton crop will yield. But if disease damages much of U.S. cotton crops, supply is lowered and demand prices rise. Continue reading “How Commodity Trading Works”