Commodity Types
- Energies, Grains, Softs, Meats, and Financials


Commodity Types - Energies, Grains, Softs, Meats and Financials

Commodities are categorized for ease of price comparison, research and other conveniences in trading. Investors interested in getting involved in one of the riskiest, and potentially most profitable, areas will need to know the basics.


Energies

One of the most active areas recently, 'the energies' encompass a basketful of products used to provide energy to heat and power homes and businesses. The most common are petroleum and its byproducts: crude oil, heating oil, propane, natural gas, coal and a few others, mostly sub-types or derivatives.

Each commodity has its distinctive 'tick' (minimum price change, set by the exchanges) and standard contract size. A standard contract size is the amount covered by a standard futures contract. In the case of crude oil, for example, the amount is 1,000 barrels. By contrast, the amount for wheat is 5,000 bushels.


Grains

Wheat, oats, corn, rice and soybean are all agricultural products traded on various exchanges, not least of which is the venerable Chicago Board of Trade (CBOT). Here again the exchanges also trade the product, as well as futures and options contracts on these and several derivative products such as bean oil.

Each product has a tick, unit and standard contract size. Some prices, like soybean meal, are listed in dollars per ton where the standard contract size is 100 tons. Easy to see why most traders never see the actual commodity.


Softs

Coffee, cocoa, sugar, cotton and orange juice are all 'soft' commodities, many of which are traded on the aptly named CSCE (Coffee, Sugar and Cocoa Exchange). Interestingly, since 80% of the oranges grown in the U.S. are turned into frozen orange juice concentrate, it's the juice that is traded as a commodity, not the fruit.

A relative newcomer on the New York Cotton Exchanges, FCOJ (Frozen Concentrated Orange Juice) has been actively traded since the creation and widespread use of inexpensive refrigeration, post WWII.


Meats

Live cattle, pork bellies and lean hogs, and some derivatives are traded on various exchanges, including the KCBT (Kansas City Board of Trade), the historical center of livestock trading in the U.S.

Pork bellies are particularly interesting, in that the bacon produced from them generally has no substitute with a similar product. Also, their price is heavily dependent on the price of grain, since the hogs are fed mostly corn and a few others. Prices tend to be less volatile than many other commodities.


Financials

Since most traders invest in commodities futures or options, not the good itself, financial products are often listed on the same exchanges.

Along with purchasable U.S. Treasury Bonds futures traded on the CBOT and elsewhere, there are a few indexes that track stocks and others. The S&P 500 Index futures contract is a popularly traded item, for example.

Keep in mind that when you see prices quoted, some sites will list abbreviations for the expiration month of the futures contract. The list used is as follows:

January - F

February - G

March - H

April - J

May - K

June - M

July - N

August - Q

September - U

October - V

November - X

December - Z

 
Hence, you might see an item listed as PBH07, which is a Pork Belly contract which expires in March of 2007.


Recommended Reading

Commodities and Commodity Derivatives

Commodity Chains and Global Capitalism

The Encyclopedia of Commodity and Financial Spreads

Commodities and
Commodity Derivatives

Commodity Chains
and Global Capitalism

The Encyclopedia of Commodity
and Financial Spreads



Search 123OnlineTrading.com







Browse Categories:
Stock Trading
Forex Trading
Commodity Trading
Options Trading
Day Trading
Technical Analysis
Real Estate Investing
Bonds Investing
Finance / Economics
For Your Trading Room
 
Online Forex Trading Tips
  Currency Trading  
  Introduction to Forex  
  Reading Forex Quotes  
  Understanding Pips  
  Types of Forex Orders  
  Understanding Margin and Leverage  
  Avoiding Failure in the Forex Market  
  Calculating Profit and Loss  
  Choosing a Forex Broker  
  Forex Trading vs The Stock Market  
  Forex - Fundamental Analysis  
  Technical Analysis  
  Fundamental vs Technical Analysis  
  Traits of Successful Forex Traders  
   
  More About Forex Trading...  
 
Online Commodity Trading Tips
 

Commodity Trading

 
  Intro to Commodities - Part 1  
  Intro to Commodities - Part 2  
  Commodity Exchanges  
  Financial Indexes  
  Commodity Types  
  Reading Commodity Prices  
  Commodities - Margins  
  Commodities - Leverage  
  Trading Coffee  
  Trading Silver  
  Trading Uranium  
  Trading Soybean  
  Trading Oil  
   
  More About Commodities Trading...  
 
Online Options Trading Tips
 

Online Options Trading

 
  Options 101  
  Calls and Puts  
  Options Trading 101  
  Options Trading 102  
  Options - Risk Management  
  How To Read Options Listings  
  Trading Strategies - Basic Concepts  
  Trading Strategies - Profit and Risk  
  The Greeks - Part 1  
  The Greeks - Part 2  
  Values and Prices - Part 1  
  Values and Prices - Part 2  
   
  More About Options Trading...  
 
Real Estate Investing
  Real Estate Investing  
  Getting Started in Real Estate  
  Questions To Ask Before Investing  
  Real Estate - Your First Time  
  Finding and Evaluating Property  
  Inspections Save You Money  
  Cheap Repairs, Big Profits  
  Keep Your Cash For A Rainy Day  
  Insurance and Risk Management  
  Managing Risk - Part 1  
  Managing Risk - Part 2  
     
  More About Real Estate Investing...