Commodities can be designed as futures, and options can be traded as financial instruments, which can better realize price discovery and avoid price risks. Because commodities are mostly industrial bases and at the forefront, the changes in futures and spot prices reflecting their supply and demand will directly affect the entire economic system. For example, rising copper prices will increase the production costs of electronics, construction and power industries, while rising oil prices will lead to rising prices of chemical products and push up the prices and supply of other energy sources such as coal and alternative energy. Investors, especially those who invest in related industries, should pay close attention to the supply and demand of commodities and price changes.
Characteristics of bulk commodities
Commodities have four characteristics: first, the price fluctuates greatly, and only when the commodity price fluctuates greatly, traders who intend to avoid the price risk need to use the forward price to determine the price first; Second, the supply and demand are large; Third, it is easy to classify and standardize; Fourth, it is convenient for storage and transportation.
All kinds of commodities
In the financial investment market, bulk commodities refer to homogeneous, tradable commodities such as crude oil, nonferrous metals, agricultural products, iron ore and coal, which are widely used as industrial basic raw materials. Including three categories, namely energy commodities, basic raw materials and agricultural and sideline products.
There are about 20 kinds of agricultural and sideline products, including corn, soybeans, wheat, rice, oats, barley, rye, pork breast, pigs, live cattle, calves, soybean powder, soybean oil, cocoa, coffee, cotton, wool, sugar, orange juice, rapeseed oil and so on. Among them, soybean, corn and wheat are called the three major agricultural futures.
9 kinds of metal products: including gold, silver, copper, aluminum, lead, zinc, nickel, palladium and platinum.
5 kinds of chemical products: crude oil, heating oil, unleaded gasoline, propane, natural rubber, etc.
Commodities that can be traded in China are: Shanghai futures (copper, aluminum, zinc, natural rubber, fuel oil and gold), Dalian futures (soybean, soybean meal, corn, soybean oil, palm oil and plastics) and Zhengzhou futures (hard wheat, strong gluten wheat, sugar, cotton, PTA and vegetable oil).