The Ultimate Guide to
Agricultural Commodities Trading
Popular Commodities Trading Broker
CMC Markets offers over 10,000 instruments for traders which include a wide selection agricultural commodities. Some of the agricultural products available to trade with CMC Markets include:
| Commodity |
*Minimum Spread: |
Margin Rate From: |
| Cocoa Bulk Beam (UK) |
3.5 |
3% |
| Cocoa (US) |
4 |
2% |
| Coffee Arabica |
3 |
2% |
| Corn |
0.9 |
3% |
| Cotton |
15 |
3% |
| Wheat |
0.8 |
3% |
*All information collected from https://www.cmcmarkets.com/, see website for full terms and conditions. Your capital is at risk. Last updated on January 26, 2017.
Agricultural commodities are classified as soft commodities. Precious metals such as gold, and natural resources such as oil and gas are classified as hard commodities. Some commonly traded agricultural commodities include livestock, meat, dairy, coffee, cocoa, sugar, cotton, and grains. Frozen meats such as frozen pork bellies, have become a popular agricultural commodity. Common livestock commodities include cattle and hogs and dairy commodities may include butter, eggs, milk and cheese. Popular grains are wheat, soybean, corn, oats, barley, and rice.
History of Agricultural Commodities
The trading of agricultural commodities dates back to 8,500 BC when an agricultural revolution led to the trading of agricultural products between different settlements. The futures market for agricultural products developed during this period due to the fact that price changes were affecting the profitability of business and sellers searched for ways to earn while they waited for a suitable buyer. In addition, traders had to find suitable storage solutions for their stock, which could be costly.
The very first agricultural futures traded was rice as far back as the 17th century in Japan. However, there are some conflicting views on whether that was actually the first time that futures trading occurred. In the 1800’s, farmers found that their perishable items would rot or lose quality the longer they had to be stored. At the same time, price changes would eat into any expected profitability. This led to the creation of the first forward contract whereby the price was determined beforehand and the buyer was allowed to make payment before receiving the goods. The proliferation of forward contracts led to the first American Exchange, called the Chicago Board of Trade (CBOT) which was established in Chicago in the year 1848. This body standardised the entire process and gave rise to standard futures contracts.
The trading of agricultural commodities eventually gave rise to the trading of precious metals and financial futures. The S&P 500 and other indices were included among tradable futures in the 1980s and 1990s.
Some of the top commodity exchanges in the world are as follows:
Top Agricultural commodity exchanges in the world are as follows:
• The Chicago Mercantile Exchange (CME) – Headquartered in Chicago and offers a range of contracts apart from commodity contracts.
• Chicago Board of Trade (CBOT) – Oldest futures exchange and is a subsidiary of the CME group.
• New York Mercantile Exchange (NYMEX) – Largest physical commodity exchange in the world.
• Intercontinental Exchange Inc. (ICE) – USA based exchange.
• Multi Commodity Exchange (MCX) – Based in Mumbai, India.
•Dalian Commodity Exchange (DCE) – Based in China and founded in 1993.
•Shanghai Futures Exchange (SFE) – Based in Shanghai, China. The only agricultural commodity currently traded on this exchange is natural rubber.
•Nasdaq Commodities OMX – Based in New York. Seafood is the only agricultural commodity traded on this exchange.
•BMF Bovespa – Based in Sao Paulo, Brazil. This exchange trades a wide range of agricultural commodities.
