Commodity Trade

 

Commodities trading, both historically and in modern times, have had tremendous economic impact on different economies and its citizens. No one knows how far the trade would go back, but it has been suggested that rice trade may have been traded in China as long ago as 6,000 years. Shortages on critical commodities have sparked wars throughout history (such as in World War II, when Japan ventured into foreign lands to secure oil and rubber), while oversupply can have a devastating impact on a region by devaluing the prices of core commodities.

Energy commodities such as crude are essential for existence of nations. The average Western consumer can become significantly impacted by high crude prices. Alternatively, oil-producing countries in the Middle East (that are largely dependent on oil as their source of income) can become adversely affected by low crude prices.

NiaCan can assist your company by offering services that covers four categories of trading commodities which includes:

• Energy (including crude oil, heating oil, natural gas and gasoline)

• Metals (including gold, silver, platinum and copper)

• Livestock and Meat (including lean hogs, live cattle and feeder cattle)

• Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar)

Risky Business and our rule in reducing the risks
Commodities can quickly become risky investment propositions because they can be affected by eventualities that are difficult, if not impossible, to predict. These include unusual weather patterns, natural disasters, epidemics and man-made disasters. For example, grains have a very active trading market and can be volatile during summer months or periods of weather transitions. Therefore, it may be a good idea to not allocate more than 10% of a portfolio to commodities (unless genuine insights indicate specific trends or events). Our team of experts can assist you with managing different typse of risk and provide you with the best and customize solution.

Exchanges
With commodities playing a major and critical role in the global economic markets and affecting the lives of most people on the planet, there are multitudes of commodity and futures exchanges around the world. Each exchange carries a few commodities or specializes in a single commodity. For instance, the U.S. Futures Exchange is an important exchange that only carries energy commodities.

The most popular exchanges include the CME Group, which resulted after the Chicago Mercantile Exchange and Chicago Board of Trade merged in 2006,Intercontinental Exchange, Kansas City Board of Trade and the London Metal Exchange.

The Bottom Line
Investing in commodities can quickly degenerate into gambling or speculation when a trader makes uninformed decisions. It is suggested that you consult with us before making any decision. By using our skills and knowledge in commodity futures or hedging, investors and business planners can secure insurance against volatile prices. Population growth, combined with limited agricultural supply, can provide opportunities to ride agricultural price increases. Demands for industrial metals can also lead to opportunities to make money by betting on future price increases. When markets are unusually volatile or bearish, commodities can also increase in price and become a (temporary) place to park cash.