Commodities are the elementary building blocks of the world’s economy, from which most other items are made. They can be divided into two groups. Natural resources that should be extracted or mined are referred to as ‘hard’ commodities. Sources of energy like natural gas and oil, as well as commodities such as aluminum and gold, are examples of “hard” commodities. Agricultural items like livestock and crops are considered ‘soft’ commodities. You need to know about the top 10 commodities to trade if you wish to.
Traders prefer commodity markets because their prices may be extremely unpredictable, which means there can be several opportunities to make a profit by going long or short.
Top 10 Commodities Traded in Today’s Market
The following are the top 10 most traded commodities in today’s market:
1. Brent Crude (Oil)
Crude oil is one of the most demanded commodities in the world as it can easily be refined into goods like lubricants, diesel, and petrol. Brent crude, along with West Texas Intermediate (WTI), is one of the two primary types of oil used to benchmark world prices. Brent crude’s price is decided by factors related to demand and supply. Prices often climb in the course of an economic expansion, as more oil is necessary to manufacture and transport goods and fall in time of an economic contraction.
2. Iron
Iron is a plentiful resource that is very simple to mine. As a result, there has always been sufficient supply to fulfill the demands, and prices have remained comparatively steady. However, due to shifting Chinese consumption, iron has experienced substantial price swings since 2000.
3. Steel
Steel is a valuable commodity due to its high strength and minimal cost, making it ideal for the manufacture of industrial applications in infrastructure, construction, and manufacturing. Due to these factors, steel prices have very closely linked to global economic performance, making them rise and fall in line along with economic output.
4. Crude Oil: West Texas Intermediate (WTI)
WTI crude is a kind of high-quality ‘sweet light’ oil that possesses a low sulfur level and density compared to Brent crude. WTI oil prices have always been highly influenced by US consumption. WTI oil is drilled in a number of locations covering the United States, including Louisiana, North Dakota, and Texas, and then sent to Cushing, Oklahoma, for price settlement.
5. Corn
Corn, commonly known as maize, is also an important soft commodity. It’s a food source that is primarily used to make ethanol, animal feed, starch, and corn syrup. Similar to soybeans, corn’s price also gets highly affected by the demand for biofuels and animal feed, along with weather patterns and the values of the US dollar.
6. Copper
Copper is an essential metal because it is an excellent heat and electrical conductor, as well as weather-proof and highly corrosion resistant. Copper’s price can change substantially in accordance with economic production due to its various uses in manufacturing and electronics.
7. Silver
Silver is also said as a “safe haven” asset, and because of that, its value mostly rises in times of economic instability. Most of the time, silver is mined from the ores of other metals, mostly copper, thus variations in demand for these other elements can impact the price of the silver.
8. Aluminum
Aluminum is one of the most important metals which are very much light and corrosion-resistant. The cost of electricity and oil can put an influence the price of aluminum because extracting the metal from its ores requires an ample amount of energy.
9. Gold
Gold is also known as a “safe-haven” asset because the value tends to hold or grow during a period of political and economic instability. Due to this reason, many traders transfer money into gold when the rate of dollars falls in value, causing gold’s price to have an inverse connection with the dollars’ worth.
10. Soybeans
Soybeans are a valuable commodity, mainly due to their low cost of production and high protein content. The cost of soybean can be affected by the demand for biodiesel, animal feed, meat, and dairy alternative products, as well as variables that might impact the supply, such as unexpected weather conditions.
Conclusion
Each commodity is unique in its own way. Hence, it’s necessary to do a comprehensive analysis of your chosen market before going for a transaction, taking into account all of the factors that might influence the price of the underlying commodity.
