Which commodities are the best to invest in futures market? from Price Vision's blog

Why trade?

 

There are a variety of reasons why you could decide to include commodity trading in your portfolio:

1. A commodity's value is often influenced by demand and supply, a variable you can watch to forecast its increase and fall and, consequently, whether to purchase or sell.

2. The most popular techniques for investing in commodities include ordinary purchasing and selling, futures contracts, and CFDs.

3. Certain products are much more likely to hold their intangible value of outside causes in uncertain and chaotic times. They are often a safer investment as a result.

4. Commodity prices are subject to wide swings from high - low on a regular basis, giving you the chance to reap significant rewards.

5. When it comes to your finances, there are few things more important than your health.

 

Trading Commodities:

 

The most widely traded commodities are listed below, albeit their popularity varies as widely as their prices do:

 

1. Gold

One of the often exchanged commodities is gold, a metal that is always in demand. With an estimated 170,000 tonnes worldwide, gold is rare, raising its competitive demand. Gold is widely employed in the jewelry business, as well as being bought as an investment through the purchase of bars and bases, and used in a lesser amount in industry. China, Russia, Australia are the primary sources of gold.

 

As a commodity, gold is largely unaffected by geopolitical events and inflation, making it one of the safest commodities investments.

 

2. Silver

Another precious metal, silver, shares many traits with gold in terms of a commodity:

*High demand since it is uncommon

*used in the manufacturing and trade of jewelry

*typically regarded as a secure investment

But because a larger portion of the silver supply is used in industry—for example, in solar panels—it might be more significantly impacted by economic downturns.

 

3. Crude Oil

Crude oil offers more than just power. It may also be put to use for:

*Petrochemicals

*manufacturing textiles

*synthesis of fertilizers

*the making of steel

*Lubricants Plastics

Consequently, even as green energy gains popularity, the need for crude oil is expected to persist in the near future.

 

Supply and demand are the primary drivers of crude oil prices, and geopolitical and economic changes have the largest impact on crude oil pricing.

 

4. Natural Gas

Natural gas, the second fossil fuel discussed in this article, is utilized as a fuel and an energy source. Although it is a rarer substance and much more costly to acquire than crude oil, it too depends on demand and supply to determine pricing.

Unlike crude oil, natural gas prices are frequently influenced by the weather; for example, colder weather increases demand for natural gas, which in turn raises prices. Again, the demand for natural gas could be impacted by the rising popularity of green energy.

 

5. Copper

Copper has a wide range of industrial and manufacturing uses because of its capacity to conduct electricity and heat and its resilience to weathering and corrosion.

*electricity cables

*Roof tiles with piping

*industrial equipment

 

Copper is a commonly available and among the most utilized metals worldwide when used as a component of an alloy. As a result, demand and supply are both high.

The state of the local and worldwide economies has a significant impact on copper prices due to the considerable consumption for copper in industry.

 

6. Coffee

Coffee is a common agricultural product that is now one of the highest volatile on our list.

 

Brazil, Vietnam, Colombia, Indonesia, and Ethiopia are the top coffee-producing countries.

 

The cost of coffee is impacted by a number of factors:

*Unrest on the political and economic fronts in the producing nations

*Climate change and its impact on coffee bean harvests

*Costs of transportation, which may be affected by the cost and supply of oil

*US dollar exchange rates

*public attitudes toward coffee drinking

 

7. Soybean

Soybeans are extensively consumed, packed with protein, and relatively cheap to produce. Brazil, China, Argentina, and India are the main producing nations.

 

In addition to their primary purpose, soybeans are essential in the creation of:

 

*animal chow

*meat alternatives

*Soybean oil as an alternative to milk

*Biodiesel

*Weather patterns, consumer demand for the goods made from soybeans, and the worth of the US dollar are among the variables that may have an impact on soybean prices.

 

8. Steel

Iron ore, carbon, and occasionally other components like manganese and tungsten are used to make steel. Additionally, it can be recycled using the electric arc method of furnacing.

It can be produced for a reasonable price, is durable, and has many uses.

 

In general, the cost of steel has indeed been influenced by economic output, but other elements could also have an impact, such as:

 

*The cost and accessibility of its component parts, such as iron ore, and geopolitical developments

*technology in development

 

Considerations to Make When Selecting Commodities to Trade

 

Take into account the following considerations before making your choice:

 

1. What is the commodity's liquidity? How simple is it to purchase and sell the product? What level of supply and demand exists for that particular material? Are there enough traders accessible to purchase from you for the price you wish to sell at if you purchase this commodity?

 

2. What is the relationship between the two? For instance, have financial sanctions been imposed against one of the major suppliers, or is the limited stock of a commodity due to an ongoing conflict in the nation that is the commodity's primary supplier?

 

3. What is the outlook for this product? Fossil fuels, for example, may become more difficult to obtain in the future, lowering the supply, which could boost demand. However, when consumers choose green energy sources (like solar power) and manufacturing techniques move away from the usage of fossil fuels, the need for them may also decline.

 

4. Which trading strategy do you intend to employ? Are you interested in normal trading where you purchase the commodities and now sell it in order to make a profit, futures contracts, CFDs, or both?

 

Although many people have access to trading commodities, your performance will depend on how well you evaluate each commodity's fit for your purposes and how adept you are at keeping track of the variables influencing that commodity's performance.

 

It is always advised that you seek qualified counsel from a reliable broker to supplement your reading and learning.