Beyond the purchase of shares in stock exchanges, transactions can be made in commodity markets.
There are many commodity exchanges around the world. In the following image you can see 58 commodity exchange centers.
There are three general categories of commodities: Soft, Hard and Emerging commodities.
|Soft commodities are cultivation products||Hard commodities are mining products or extracted by other sources.||Emerging commodities have no liquid futures markets.|
|Barley, Corn||Metals (Gold, Silver, Aluminum, Copper, Platinum, Lead)||Iron|
|Coffee, Cacao, Sugar||Gas (Nature Gas)||Timber|
|Cotton||Oil & Energy (Crude Oil, Gas Oil, Heating Oil)||Coal|
There are many commodity markets. Below, you can see the 22 most important commodity exchanges around the world with their operating hours.
Operating Hours (UTC)
|Tokyo Commodity Exchange||00:00 – 06:30, 08:00 – 19:00|
|Tokyo Grain Exchange||00:00 – 02:00, 04:00 – 09:45|
|Central Japan Commodity Exchange||11:50 – 02:30, 04:00 – 06:30|
|Dalian Commodity Exchange||01:00 – 03:30, 17:30 – 19:00|
|Dubai Mercantile Exchange - DME||23:00 - 22:15 (next day)|
|Brazilian Mercantile and Futures Exchange||13:00 – 20:30|
|ICE Futures Europe||Open 24 hours|
|London Metal Exchange||Open 24 hours|
|European Energy Exchange||Open 24 hours|
|Iran Mercantile Exchange||13:30 – 21:30|
|Multi Commodity Exchange||04:15 – 18:00|
|South African Futures Exchange||07:00 – 15:00|
|Australian Securities Exchange||23:50 – 06:12|
|Flett Exchange||Open 24 hours|
|Bursa Malaysia - MDEX||01:00 – 04:30, 06:30 – 08:45|
|Chicago Mercantile Exchange||15:00 – 22:00, 23:00 – 22:00 (next day)|
|National Commodity and Derivatives Exchange||03:00 – 01:30|
|Eurex Exchange||07:00 – 21:00|
|New York Mercantile Exchange||12:20 – 17:30, 22:00 – 21:15 (next day)|
|Moscow Exchange||06:00 – 19:50|
|Chinese Gold and Silver Exchange Society||01:00 – 04:00, 06:00 – 09:00|
|Shanghai Futures Exchange||01:00 – 03:30, 05:30 – 07:00, 13:00 – 18:30|
The financialization of commodities and the transaction at spot prices have several complications. The first example is the heterogeneity between the free price fluctuation through dematerialized securities (non-rem product) and the actual quality of the natural product. (for example sugar ). Secondly if we calculate the actual cost of the transporting product in different parts of the world we would have different price for every different place of delivery.
Due to the lack of critical information about the products and the natural market there are several results such as:
- Product prices in commodity markets climb. This leads to a reduction in demand from traders and consumers.
- A sudden strengthening of the supply of goods has the effect of reducing the price and boost demand.
- The futures of goods affect current values.
Because of the role that information play in commodity prices, increased demand leads to an increase in price too. This is because a higher price of a commodity signals stronger economic growth and motivates the producer to ask more ‘’such’’ goods to raise the production of the respective products (that are based on the merchandise).
If speculation lead to increased futures prices of a product, increasing the yield spread of this value would result in a larger volume storage of goods, which in turn would lead to even higher current value, since it effectively reduces the supply.
Consequently, the delay in the supply of goods for consumption, makes the price higher than the present value in all currently available products and returns easy yields.
The picture below shows the reverses of SDR, forex and gold in 2006 from Wikipedia.
Source : Gold as an investment
Here is the meaning of symbols in the image of commodity exchange centers.
|Com. Index||Commodities Index|
|Ind. M||Industrial Metals|
|Nat. Gas||Nature Gas|
|Pr. M||Precious Metals|