Basics of the Commodity Market
Commodities are raw materials or primary goods that are traded globally, such as metals, energy, and agricultural products. In Australia, commodities play a major role in both exports and investment markets.
Most investors access commodities through futures contracts, ETFs, or managed funds rather than physical ownership.
Soft Commodities
Soft commodities refer to agricultural goods such as wheat, coffee, sugar, cotton, and livestock.
Prices are influenced by weather, seasonal yields, and global consumption trends.
Hard Commodities
Hard commodities are resources like gold, iron ore, oil, coal, and copper. Australia is a major exporter of these materials.
Prices depend on mining output, industrial demand, and geopolitical developments.
Risks in Commodity Trading
Commodity prices are volatile and influenced by weather, politics, supply chains, and currency movements.
Futures trading uses leverage, which can amplify gains and losses.
Commodity Pricing & Futures
Most trading occurs via futures contracts — agreements to buy or sell commodities at a future date.
Futures prices influence spot markets and reflect expectations for supply and demand.
Commodities in the Australian Economy
Commodities are central to Australia’s economy and export earnings.
Rising global demand often strengthens the AUD and ASX resource stocks.
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