Commodity Trading: Top 10 Most Traded Commodities In The World
Do you have any idea as to what are the top most traded commodities in the word? If your answer is NO, then read on….
What are the best commodities to trade?
This question always seems to pop up with new traders in the field of commodity trading. So, if you are on the same fence, this article is definitely for you. The article uncovers the list of top 10 commodities in the world that will assist you to be the king of commodity market.
KEY TAKEAWAYS OF THE ARTICLE
- Definition of commodities
- Criteria fulfilled by a commodity
- What is commodity trading?
- Top 10 commodities in the world
- Where to trade the top commodities?
Before we talk about the most traded commodities in the world, being a commodity trader, you must know ‘what is a commodity?’ and ‘what are the basics of commodity trading?’. So, let’s have a look.
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What is a Commodity?
As per the Oxford dictionary, a commodity can be defined as a useful or valuable thing (especially a raw material or primarily agricultural product) that can be bought and sold. In other words, a commodity can be defined as a basic product that is used in trade and commerce, as inputs in the production of secondary or tertiary goods and services.
However, this is just a basic definition. For any substance to be a commodity in trade, there are certain criteria that must be fulfilled. The criteria are:
- Tradability: A substance can be referred as a commodity when it can be sold in other locations which are distant from where it was produced.
- Deliverability: To be a commodity, a substance should be able to be physically delivered. Or in other words, it should not be an abstract thing.
- Liquidity: Any substance can be a commodity if and only if it acquires an active and well-established market in present time along with a wide scope of future trading too.
Thus, a commodity can be defined as a raw material that is capable of producing secondary and tertiary products or services provided the raw material holds an active and well-established place in the market along with the properties of tradability & deliverability.
Now, when you are clear with the definition of commodity, let’s understand commodity trading.
What is Commodity Trading?
Commodity trading is nothing but, selling, buying and exchange of raw and useful goods for the purpose of investment. Just like stock trading, it is also based on the forecast. However, the difference lies in the type of goods. The market of commodity trading deals only with physical goods.
This kind of trading is a computer-based trading where commodity brokers and commodity trading companies take position or own an asset, as per the current commodity prices along with the forecasted economic trends of commodity price and commodity future in the market.
This forecast based market asserts oil and gold as the most traded commodities by value. There are certain more commodities that can be regarded as the most profitable commodities. Check out our list of top traded commodities in world.
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Top 10 Most Traded Commodities in the World
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Crude Oil
No wonder that this commodity is many a time referred as ‘black gold’. Considering its ever-global demand and the rate at which its consumption is increasing to fulfill the ever-rising energy need, the commodity is no less than gold.
Since this mixture of hydrocarbons is a type of non-renewable energy resources it is one of the most expensive commodities which stands on number one position in the list of top traded commodities.
Where to Trade Crude Oil: In India, this energy resource with finite presence is traded at the National Commodity and Derivatives Exchange (NCDEX). And, in other countries, its trading finds the best place in New York Mercantile Exchange (NYMEX), Tokyo Commodity Exchange (TOCOM), Dubai Mercantile Exchange (DME) etc.
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Coffee
That soothing aroma of coffee! Just like others, you too must be a lover of coffee. Statistics say that approximately 2.25 billion cups of coffee are consumed every day in the world.
Surveys indicate that in the last 40 years the worldwide consumption of coffee has increased by 100%. And it is this ever-increasing fondness for coffee that makes it the second most traded commodity in the world.
Where to Trade Coffee: Apart from India’s National Commodity and Derivatives Exchange (NCDEX), BM&FBOVESPA, Singapore Commodity Exchange (SICOM), Kansai Commodity Exchange (KEX), New York Mercantile Exchange (NYMEX) etc. are few major global trading stations of coffee.
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Natural Gas
Natural gas, being the principal source of energy for day to day activities, finds a significant place in commodity exchange. When the world is running towards pollution-free fuel, this mixture of hydrocarbons and methane serves as the cleanest fossil fuel and hence no doubt, why it finds a place in the top 3 most traded commodities.
Where to Trade Natural Gas: New York Mercantile Exchange (NYMEX), Multi Commodity Exchange of India Ltd (MCX), Intercontinental Exchange (ICE) are the top commodity trading stations in the world for trading natural gas.
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Gold
Gold, the pious metal is the symbol of wealth & prosperity and medium of financial security for every individual. In fact, this precious metal decides the economy of any country.
Being a subject of such great importance, there is no surprise that it cements its position as one of the best commodities to be traded. Also, India being the largest consumer of gold in the world opens a wide scope for its future trading.
Where to Trade Gold: The best commodity trading platforms for gold are New York Mercantile Exchange (NYMEX), Dubai Gold & Commodities Exchange (DGCX), Tokyo Commodity Exchange (TOCOM), etc. In India it is traded at Multi Commodity Exchange of India Ltd (MCX).
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Brent Oil
Bent oil is the second most traded oil after crude oil and holds an eminent position in the most traded commodities by volume as well as by value. Also, very few know that Brent oil with 0.37% Sulphur content is termed as sweet crude oil.
It serves as the benchmark for classifying other oils i.e. oils with more than 0.5% Sulphur content are termed as sour crude oil. Found in North Sea, it is massively consumed by Europe and Africa.
Where to Trade Brent Oil: Its trading was first started in International Petroleum Exchange, London, which later shifted to the Intercontinental Exchange (ICE). Now it is also traded majorly at New York Mercantile Exchange (NYMEX) along with various other trading stations.
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Silver
Being an excellent thermal and electrical conductor, silver finds a number of applications in electrical and electronic industries. Due to its antibiotic properties it is also of great importance in medical industries.
Besides this, history speaks that it has been a source of stability in investment portfolios. Though it once stood as the number one commodity to be traded, it still maintains a good position among the top 10 traded commodities in world
Where to Trade Silver: Besides Multi Commodity Exchange of India Ltd (MCX), it is also traded at COMEX in New York, London Bullion Market, etc.
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Sugar
Did you know that there is no part in the world which doesn’t trade in sugar? In some parts of the world, especially in British colonies, this commodity is even termed as ‘white gold’. This is enough to tell why Sugar stands as the one most traded commodity in world. Thus, if you are planning to get into commodity trading, sugar is surely the best commodity to trade.
Where to Trade Sugar: New York Board of Trade (NYBOT), Tokyo Grain Exchange (TGE) are the two prominent commodity trading stations for sugar.
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Corn
Corn being the most versatile crop that can be grown in diversified climatic conditions is often referred as ‘yellow gold’. The versatility of this crop is the major reason for which it is the most cultivated crop in the world.
Since the two types of crops, sweet corn and field corn find great value for human consumption and industrial purposes respectively, the huge consumption marks its position in the top 10 commodities in world.
Where to Trade Corn: Chicago Board of Trade (CBOT) is the leading trading station for corn, besides this, Euronext, Tokyo Grain Exchange (TGE), Brazilian Mercantile and Futures Exchange (BM&F), Kansai Commodities Exchange (KANEX), are some other major commodity trading platforms.
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Wheat
After corn and rice, wheat is the world’s third most grown crop which also stands as the most consumed food grain. It is also known as the staple food for various states. From pasta and noodles to bread, cakes and sweets wheat is used in many types of food items.
On an average, nearly two-third of the world’s wheat production is used for human consumption and the rest is used for livestock feed and industrial use and thus Wheat is one of the most traded commodities.
Where to Trade Wheat: If you are planning to trade in wheat in commodity market at international levels, Chicago Board of Trade (CBOT), Kansas Board of Trade (KCBT), Tokyo Grain Exchange (TGE), Kansai Commodities Exchange (KANEX) are few major trading stations for you.
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Cotton
Cotton is the first discovered natural fiber that has been cultivated in India for 6000 years. Whether it’s textile industry, paper industry, pharmaceuticals or fishing industry, cotton has a number of uses and hence it is always in demand. Thus, it always comes with monetary profit when traded as a commodity.
Where to Trade Cotton: In India, it is traded at Multi Commodity Exchange of India Ltd. (MCX) and National Commodity Exchange Ltd. (NCEL). Some other major commodity trading platforms are New York Mercantile Exchange (NYMEX), Intercontinental Exchange (ICE), Brazilian Mercantile and Futures Exchange (BM&F).
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Some Other Commodities That Are Traded in Large Volumes
- Soybeans
- Copper
- Soybean Oil
- Cocoa
- Animals and Animal Products
- Metals
- Plastic
- Heating Oil
- Uranium
- Palladium
- Platinum
- Palm Oil
- Rough Rice
- Bio-fuels
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Wrapping It Up
With the advent of internet, when online commodity trading is gaining fame, more and more people, even individuals can get into commodity trading and can earn a great profit. All it requires is just good trading skills that can evaluate a variety of commodity investments and commodity indices to stand firm on a commodity trading platform.
So now, you know about the world of commodity trading. It’s time to put your trading skills on a test and rule the market.
