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Markets of Commodities

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Published in Market Stories
Wednesday, 16 July 2014 00:00

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.

 

Commodity Exchange

Operating Hours (UTC)

Monday-Friday

   
jpn Tokyo Commodity Exchange 00:00 – 06:30, 08:00 – 19:00

jpn Tokyo Grain Exchange 00:00 – 02:00, 04:00 – 09:45

jpn Central Japan Commodity Exchange 11:50 – 02:30, 04:00 – 06:30

chi Dalian Commodity Exchange 01:00 – 03:30, 17:30 – 19:00

uae Dubai Mercantile Exchange - DME 23:00 -  22:15 (next day)

bra Brazilian Mercantile and Futures Exchange 13:00 – 20:30

gbr ICE Futures Europe Open 24 hours

gbr London Metal Exchange Open 24 hours

ger European Energy Exchange Open 24 hours

iran Iran Mercantile Exchange 13:30 – 21:30

ind Multi Commodity Exchange 04:15 – 18:00

zaf South African Futures Exchange 07:00 – 15:00

aus Australian Securities Exchange 23:50 – 06:12

usa Flett Exchange Open 24 hours

mys Bursa Malaysia - MDEX 01:00 – 04:30, 06:30 – 08:45

usa Chicago Mercantile Exchange 15:00 – 22:00, 23:00 – 22:00 (next day)

ind National Commodity and Derivatives Exchange 03:00 – 01:30

ger Eurex Exchange 07:00 – 21:00

usa New York Mercantile Exchange 12:20 – 17:30, 22:00 – 21:15 (next day)

russia Moscow Exchange 06:00 – 19:50

fra Chinese Gold and Silver Exchange Society 01:00 – 04:00, 06:00 – 09:00

chi 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:

  1.  Product prices in commodity markets climb. This leads to a reduction in demand from traders and consumers.
  2.  A sudden strengthening of the supply of goods has the effect of reducing the price and boost demand.
  3.  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.

 sdr

 

Source : Gold as an investment

 

Here is the meaning of symbols in the image of commodity exchange centers.

 

Symbol Name
   
Ag Agricultural

B Biofuels

C Coffee

Cl Coal

Cr Crude Oil

Cur Currencies

Com. Index Commodities Index

D Diamonds

Ds Distillates

E Energy

Em Emissions

Env Environmental

Et Ethanol

F Freight

Fr.M Ferrous Metals 

G Gold

Gr Grains

Ind. M Industrial Metals

M Metal

Min Mineral

Mt Meats

Nat. Gas Nature Gas

P Power

Pl Plastic

Pet Petrochemicals

Pr. M Precious Metals

R Rubber

S Silver

T Treasuries

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Dimitrios Vezeris

MSc Electrical & Computer Engineer | COSMOS4U

Tel: +30 2541021919 |d.vezeris@COSMOS4U.net

Lefkippou 6 | 67131 Xanthi | Hellas | Europe

About Us

COSMOS4U is a financial research & software development company for scientific and financial markets applications, indicators & auto trading software robots. AdMACD automated trading system for Metatrader has been developed recently. The site www.COSMOS4U.net provides technical analysis signals of stock markets based on AdMACD indicator and on actual data of real-world markets.

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