The commodity market is a market, where commodities are bought and sold. The commodity market differs from a regular market by a specific organizational form of trading according to established rules. The main function of the commodity exchange is assurance of regular communication between buyers and sellers, when transactions are carried out with available batches of goods. The exchange, while developing, started establishing trade customs, commodity standards, standard contracts, performing price quotations, resolving dispute, etc.
Items of international trade now are about 70 types of goods, having 30% of the international commodity turnover. They include metals (precious, base, rare), 'soft products' (coffee, cocoa, sugar, pepper), grain, seeds, livestock, energy sources (gas, raw materials, oil products).
Commodities are not present at the exchange, but sold and bought without presentation and examination. Transactions are concluded on the basis of standard exchange contracts, strictly regulating quality and terms of delivery. At the exchange they sell and buy not certain batches of goods, but stock contracts, specifying amounts of goods of certain sort, type, class, as established by the exchange. The seller at the exchange delivers to the buyer not commodities, but a document, confirming the title to goods. Most of the international exchange turnover takes place at the futures and options exchange, where they trade option and futures contracts.
Trading volume at such exchange has increased by several hundred times due to the fact, that almost all transactions are fictitious (only 1-2% of transactions end up with delivery of goods, all the rest - with payment of price difference). Prices at such exchanges are more volatile in comparison with the stock exchange, and the major risk is associated with the direction of price movement. Quotation fluctuations are mainly caused by speculative actions; that is why it is very difficult to maker forecasts for such markets. Therefore, beginners are not recommended to trade at commodity exchanges.
Items of international trade now are about 70 types of goods, having 30% of the international commodity turnover. They include metals (precious, base, rare), 'soft products' (coffee, cocoa, sugar, pepper), grain, seeds, livestock, energy sources (gas, raw materials, oil products).
Commodities are not present at the exchange, but sold and bought without presentation and examination. Transactions are concluded on the basis of standard exchange contracts, strictly regulating quality and terms of delivery. At the exchange they sell and buy not certain batches of goods, but stock contracts, specifying amounts of goods of certain sort, type, class, as established by the exchange. The seller at the exchange delivers to the buyer not commodities, but a document, confirming the title to goods. Most of the international exchange turnover takes place at the futures and options exchange, where they trade option and futures contracts.
Trading volume at such exchange has increased by several hundred times due to the fact, that almost all transactions are fictitious (only 1-2% of transactions end up with delivery of goods, all the rest - with payment of price difference). Prices at such exchanges are more volatile in comparison with the stock exchange, and the major risk is associated with the direction of price movement. Quotation fluctuations are mainly caused by speculative actions; that is why it is very difficult to maker forecasts for such markets. Therefore, beginners are not recommended to trade at commodity exchanges.
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