Commodities play an important role in the world economy. These commodities are typically extracted/produced and used around the world. Their prices and demand can significantly affect global trade and economic stability. In this article, we will look at five of the most popular commodities in world markets.
Commodity — Commodities are physical substances, or foods, grains, and metals that are interchangeable. These products are bought or sold by investors, usually through futures or options.
The commodity market is an integral part of the financial markets and has historically served as their foundation. It permeates the gold, stock, bond, currency, and futures markets, and it is the commodity markets that form the basis for assessing the capitalization of today’s financial markets.
It is important to realize that the price of some commodities is subject to seasonal fluctuations. For example, the wheat crop is usually harvested in late summer or early fall. During this period, the supply of wheat on the market increases and prices decrease, while the opposite is true during the winter months. The same thing happens with natural gas – demand usually increases during the winter months, when its consumption for space heating and industry increases. That is, demand raises the price.
However, that’s not the only thing that can change prices, per commodities. Among the most important factors:
- Climatic conditions.
- The political situation in a certain region or in the world at large.
- Technological innovations.
- Economic changes.
It is worth noting that depending on the type of Commodity, the list of these factors will expand.
5 most popular commodities
The most popular commodities include:
- Oil is the most sought-after commodity in the world. It is used to produce fuel, lubricants, and many other products. It is the rising price of oil that is one of the factors affecting inflation. Oil is an important raw material for many sectors of the economy, including transportation, manufacturing, and energy. Rising oil prices increase the costs of producing and transporting goods and services, increasing the prices of those goods and services.
- Gold is a precious metal that has historical value as a medium of exchange and investment. It is used in jewelry, electronics manufacturing, and in central banks as a reserve. Gold is a protective asset, during periods of a weak economy or other factors that negatively impact high-risk assets – it is gold that is a safe haven for investors. Also, during periods of high inflation, when the prices of goods and services rise, the price of gold can also rise. This is because gold is an asset that does not depreciate over time. You can trade gold on the MOVO platform by simply entering XAU/USD in the search. You can start trading from as little as $5; leverage up to 50x is allowed to increase the trading volume.
- Silver is also a precious metal used in jewelry, electronics, and photography. It is also used in industry for solar panels and mirrors. Silver prices can be influenced by global trends.
- Iron is an important metal used in construction, engineering, and other industries.
- Wheat is a staple food crop that is used for bread, pasta, and other products. It is an important product for poor countries. Often wheat shortages provoke political instability in such states. And for large agrarian powers, wheat is one of the main exports.
This is a short list of primary products. It does not include copper, coal, gas, corn, sugar, meat, coffee, cotton, and so on. Commodities are plentiful, so there is always work for the experienced investor.
Conclusion
Commodities represent key elements of the world economy and world trade. Their prices and demand influence various industries and can serve as indicators of economic health. However, it is important to realize that commodity prices can fluctuate in response to a variety of factors, including changes in demand, production, and global events.
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