Investment Sight

Dividing commodities into different types not only makes it easier to make comparisons in the prices and to do research, but this also makes it convenient to trade. Yet for all types of commodities available out there, you will need to know some of the basics to get started.

Energies – This type of commodity has been highly active over the last few years. It features several different products which provide energy to power and heat up homes and businesses. This category includes petroleum and its byproducts, propane, heating oil, coal and natural gas. The minimum price in this kind is set by exchange and there are also standard contract sizes, which are the amount covered by futures contracts.

Grains – This category includes oat, corn, soybean, rice and wheat and lots of other agricultural products. Usually, these commodities are sold out as future trades and have a minimum and a standard contract size also. The CBOT or Chicago Board of Trade has been involved in these types of commodities.

Softs – These commodities include coffee, sugar, cocoa, orange juice and cotton. Oranges are not traded in this type because almost 80% of them are converted into frozen concentrates, and that is why orange juice itself is traded. New York Cotton Exchange even has FCOJ or Frozen Concentrated Orange Juice as one thing that they trade.

Meat – This type of commodities includes pork bellies, lean hogs and live cattle. This commodity is perhaps less volatile than the other types and for a number of times, it depends upon grains also. This is because most of the livestock is fed by grain only. This commodity is primarily exchanged by the KCBT or Kansas City Board of Trade.

Financial – Financial is the last type of commodities most of which trade in options or futures, rather than actual goods. This means that financial commodities are usually listed on same exchanges. The US Treasury Bonds are also included and can be seen on CBOT and S&P 500 Indexes. Stocks are also traded by the exchange as one of the financial commodities.

As can be seen, there are different types of commodities available out there in the market and each type of commodity has a different exchange to trade them. Now that you are aware of the basics, you will be feeling more comfortable while navigating through the puzzle of different commodity types and you will be able to choose the one that best suits your requirements and preferences.