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Agricultural commodities
Trading agricultural commodities is the province of agricultural producers and the likes of multinational grain companies. It is also the province of traders speculating on movements in the agricultural commodities markets. Both groups trading commodities rely upon fundamental analysis of the commodity in question and engage in technical analysis using technical analysis tools such as Candlestick chart formations in order to judge when to stay with a market trend and when to expect a market reversal. The world needs food but growing conditions, food transport and storage, and diversion of food stuffs into energy all affect availability and, therefore, commodity price. This mixture of facts and conditions drives pricing in the futures markets in agricultural commodities. Whether you are interested in trading corn futures or live cattle Commodities and Futures Training will be a good place to start.
The Traders
When you start commodity trading you will be up against the likes of traders working for companies like Cargill and Archer Daniels Midland. These multinational food companies know the fundamentals of the agricultural commodities markets as it is their business. They will, in fact, know fundamentals before you do. Although their advantage may only be minutes or even seconds they will cause market movement to which you will have to react. They are typically the drivers of the commodities markets in wheat, corn, soybeans and other products. You will be in the pack with other traders doing Candlestick analysis to predict market reaction to the trades made by the big money.
Why They Trade
There are two types of traders in agricultural commodities. There are the producers and the buyers who are hedging commodities and their investment risk. There are traders looking to profit on market movement. Farm cooperatives growing sugar beets and sugar producers who buy sugar beets or cane each buy or sell commodities futures contacts to lock in price at a future date. Because these folks know the market in their commodity they may well also trade for profit but their primary motive is to maintain a stable price for their product. The trader speculates on market movement and market reversal in looking to profit. The producers and buyers want a stable market. The pure trader would like to see lots of market volatility.
2. Trading agricultural commodities is the
province of agricultural producers and the
likes of multinational grain companies. It
is also the province of tradersspeculating
on movements in the agricultural
commodities markets.
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3. Both groups trading commodities rely
upon fundamental analysis of
the commodity in question and engage
in technical analysis using technical
analysis tools such as Candlestick chart
formations in order to judge when to stay
with a market trend and when to expect
a market reversal.
www.CandlestickForums.com
4. The world needs food but growing
conditions, food transport and
storage, and diversion of food stuffs
into energy all affect availability
and, therefore, commodity price.
www.CandlestickForums.com
5. This mixture of facts and conditions
drives pricing in the futures
markets in agricultural commodities.
www.CandlestickForums.com
6. Whether you are interested in
trading corn futures or live
cattle Commodities and Futures
Training will be a good place to start.
www.CandlestickForums.com
8. When you start commodity trading you will be
up against the likes of traders working for
companies like Cargill and Archer Daniels
Midland. These multinational food companies
know the fundamentals of the agricultural
commodities markets as it is their business.
They will, in fact, know fundamentals before you
do.
www.CandlestickForums.com
9. Although their advantage may only
be minutes or even seconds they will
cause market movement to which
you will have to react.
www.CandlestickForums.com
10. They are typically the drivers of the
commodities markets in
wheat, corn, soybeans and other
products.
www.CandlestickForums.com
11. You will be in the pack with other
traders doing Candlestick analysis to
predict market reaction to the trades
made by the big money.
www.CandlestickForums.com
13. There are two types of traders in
agricultural commodities. There are
the producers and the buyers who
are hedging commodities and
their investment risk.
www.CandlestickForums.com
14. There are traders looking to profit on
market movement. Farm cooperatives
growing sugar beets and sugar producers
who buy sugar beets or cane each buy or
sell commodities futures contacts to lock
in price at a future date.
www.CandlestickForums.com
15. Because these folks know the market
in their commodity they may well also
trade for profit but their primary
motive is to maintain a stable price
for their product.
www.CandlestickForums.com
16. The trader speculates on market
movement and market reversal in looking
to profit. The producers and buyers want
a stable market. The pure trader would
like to see lots of market volatility.
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17. Why You Trade and Market
Participation
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18. When a farm cooperative has locked in
what they consider a fair price for their
sugar beets, corn, soy beans, etc. they
will probably go back to the work of
farming. Thus their strategy will be to
make a single or single set of trades.
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19. When they are done trading volume in
a commodity may go down if the producers and
buyers are satisfied. Traders who are not in the
business of the commodity may well keep
tracking the commodity looking for market
movement based upon news about the
weather, new buyers, etc.
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21. Buying calls and buying puts on
agricultural commodities is entirely
possible. Typically the trader buys
and the large company sells. Selling
calls and puts is typically more
profitable over time but can be costly
on a single bad trade.
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22. Having deep pockets allows the big
guys to do this while you leverage
smaller holdings for potential large
profit. You really want to get out of
your futures position in agricultural
commodities if you are not a
producer or buyer.
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23. They will not come to your house and
leave cows on your lawn but they will ask
you to produce cows to sell or come and
get them unless you exit your contract
before expiration.
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