Commodities Trading
Enjoy the benefits of trading gold, silver, crude oil, and other commodities with Hexmarkets
Commodities Trading
Enjoy the benefits of trading gold, silver, crude oil, and other commodities with Hexmarkets
Trade the Building Blocks of the Economy - From Oil to Gold
Commodities are naturally occurring materials or goods that are collected and processed for use in human activity – such as oil, sugar and precious metals. They form the basis of our economy, because the raw materials are needed for the production of food, energy and clothing.
Liquidity
Transparency
Leverage
Commodities are naturally occurring materials or goods that are collected and processed for use in human activity – such as oil, sugar and precious metals. They form the basis of our economy, because the raw materials are needed for the production of food, energy and clothing.
Liquidity
Transparency
Leverage
What are commodities?
Commodities are naturally occurring materials or items that are extracted and processed for human use, such as oil, sugar, and precious metals. They are the foundation of our economy since raw materials are required for the production of food, energy, and clothing. Commodities are frequently mass-produced and standardized for quality and quantity, so they are priced the same regardless of who manufactured them. Commodities are bought and sold on exchanges, like stocks. Well-known exchanges include the Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX) and London Metal Exchange (LME).
Types of Commodities
There are a wide range of commodities available, all grouped into one of several categories.
| Commodity Type | Examples |
| Metals | Gold, Silver, Copper and Platinum |
| Energy | Crude Oil, Natural Gas, Heating Oil and Gasoline |
| Agricultural | Corn, Wheat, Soybeans, Coffee and Sugar |
| Livestock and Meat | Live Cattle and Lean Hogs |
| Soft | Cotton and Cocoa |
How to trade commodities
The most user-friendly approach to trade commodities is through CFDs (Contract for Difference). Many trading platforms offer CFDs, which allow investors to trade oil, gas, and coffee, among other commodities, without owning the underlying asset. CFDs are adaptable and allow traders to sell short, which means they could benefit if the commodity price falls. Alternatively, investors can acquire stocks in companies that are significantly reliant on commodity markets. Shares of oil and gas major Shell Plc, for example, will be tightly tied to commodity prices in the energy industry. A firm’s profits are driven by the value of the commodity assets it holds, processes and sells, and some investors prefer to gain indirect exposure to the commodity sector by investing in equities.
What drives commodity prices?
Commodities prices are driven by the forces of supply and demand, which means there are a variety of factors that can impact them. Competition The introduction of new technology and items may lower demand for existing commodities. For example, as renewable energies have grown in popularity, investment in oil and gas has declined dramatically. New companies can also have an impact on the market, particularly those with more efficient supply chains and speedier production lines, which reduce costs and appeal to shareholders. Politics Political events and policies can cause changes in prices if they have an impact on exports and imports. For example, increases in import duty can drive up prices. Macroeconomics A weak economy often lowers the demand for commodities – especially those involved in building and transport. Whereas a booming economy can result in increased demand which could lead to higher prices. Seasonality Agricultural commodities are especially reliant on seasonal cycles, which affect output and harvest. Prices tend to climb when harvest estimates are good and fall after harvest, when the market is oversupplied with products. Weather Extreme weather and natural disasters can have an impact on natural resource production and transportation. Colder conditions, for example, can cause the earth to freeze or the cargo to be compromised. Anything that has an impact on the supply chain, such as decreased output, might cause market prices to increase.