Commodity Exchanges Continued…

The United Kingdom offers the International Petroleum Exchange, the Futures and Options Exchange of London, and the London Metal Exchange.

Other major commodity exchanges are found in Australia, Brazil, Canada, France, Hong Kong, Japan, Russian, Singapore, South Africa, and more.

Goods Traded at Commodity Exchanges

Some of the most common commodities dealt on commodity exchanges are agricultural products, from corn and beans to vegetable oils, from sugar and coffee to grains, and from cocoa and soy products to sunflower seeds. Dairy products, meat, and similar items are also traded on commodity exchanges. The closing prices set by the leading commodity exchanges for these products are those that will be in effect worldwide, potentially holding huge ramifications for people around the globe. Other commonly dealt commodities are petroleum products – including crude oil, gasoline, and naphta – as well as metals, precious metals, and energy.

Futures and Options

To trade in futures is to be bound by a contract requiring delivery of a product at a specified price at a specified date in the future. Futures may be contracts dealing with specific commodities – anything from agricultural products to energy – or financial futures, which refers to financial items such as bonds, certificates of deposit, currencies, or indexes.

Unlike futures, buyers of options are not bound or obligated to buy anything. They are given the ability and right to buy certain products at a certain price, but are not required to do so. They are usually good for a specified amount of time, after which they expire.

Additional information about commodity exchanges

Commodity exchanges may make their closing prices available publicly, although they are not required to do so. Trading on commodity exchanges is almost always done only on a large scale, and so is not available to smaller producers or investors. However, traders on commodity exchanges work closely with smaller businesses and can provide their services for a fee, giving these small businesses the opportunity to have their products traded globally.

By Kira Lee