Success Trading Markets

 Commodity markets are markets where raw or primary products are exchanged.   These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.  A futures contract has the same general features as a forward contract but is transacted through a futures exchange.

•  Agricultural (Grains, and Food and Fiber) corn, oats, rice, soybeans, soybean meal, soybean oil, wheat, cocoa, coffee, cotton, sugar

• Livestock & Meat - lean hogs, frozen pork bellies, live cattle, feeder cattle

• Energy  - wti crude oil, brent crude, ethanol, natural gas, heating oil, gulf coast gasoline, RBOB gasoline, propane, uranium

• Precious metals  - gold, platinum, palladium, silver

• Industrial metals -copper, lead, zinc, tin, aluminium, aluminium alloy, nickel, recycled steel

• Rare metals - Germanium, Cadmium, Cobalt, Chromium, Magnesium, Manganese, Molybdenum, Silicon, Rhodium, Selenium, Titanium, Vanadium, Wolframite, Niobium, Lithium, Indium, Gallium, Tantalum, Tellurium, and Beryllium.

• Other Minerals and Materials - Asphalt, Aggregate, Arsenic, Borax, Boron, Gypsum, Asbestos, Chlorine, Fluoride, Cement, Sulfuric Acid, Carbon Dioxide, Fluorspar, Bromine, and Titanium Dioxide.

• Agricultural Products - Fresh Flowers, Cut Flowers, Melons, Lemons, Tung Oil, Gum Arabic, Pine Oil, Xanthan, Milk, Tomatoes, Grapes, Eggs, Potatoes, and Figs.

• Other - ethanol, rubber, palm oil, wool, polypropylene, polyethylene

•  Environmental Commodities - carbon offsets, Renewable Energy Certificates, and white certificates (energy efficiency credits).

Commodities have offered superior returns in the past, but they still are one of the more volatile asset classes available.   They do carry a higher standard deviation (or risk) than most other equity investments. Individual commodity futures are an investment for more sophisticated investors.
During inflationary times, many investors look to asset classes like real-return bonds and commodities (and possibly foreign bonds and real estate) to protect the purchasing power of their capital. By adding these diverse asset classes to their portfolios, investors seek to provide multiple degrees of downside protection and upside potential.

Commodity Exchanges

Commodities are traded as futures in different contract sizes on one of 15 different exchanges.  This can create  confusion and it is worth double checking to see how your individual commodity of choice compares to others in contract size, price movement and returns/risk. 

CBOT: Chicago Board of Trade
CME: Chicago Mercantile Exchange
COMEX: Commodity Exchange, Inc.
GLOBEX: CME Electronic
ECBOT: CBOT Electronic
IMM: International Monetary Market (Div. of CME)
IOM: Index and Options Market (Div. of CME)
KCBT: Kansas City Board of Trade
NYME: New York Mercantile Exchange
WPG: Winnipeg Commodity Exchange

Some common commodity sizes and price comparisons: