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What are Commodities

The trading of commodities has been around for a long time. The soft commodities market is an interesting one and you can trade many well-know products such as coffee, soy beans etc. There is a good opportunity to make profit from these often volatile products.

On TradersTFX you can take positions, long or short on the prices of CFD contracts for the following products: Sugar, Coffee, Cotton and Cocoa.

History of Commodities

Before the North American futures market originated some 150 years ago, farmers would grow their crops and then bring them to market in the hope of selling their commodity or inventory. But without any indication of demand, supply often exceeded what was needed, and unpurchased crops were left to rot in the streets. Conversely, when a given commodity such as Coffee was out of season, the goods made from it became very expensive because the crop was no longer available, lack of supply.

In the mid-19th century, grain markets were established and a central market place was created for farmers to bring their commodities and sell them either for immediate delivery (spot trading) or for future delivery (futures). The latter contracts, forwards contracts, were the forerunners to today's futures contracts. In fact, this concept saved many farmers from the loss of crops and helped stabilize supply and prices in the off-season. Popularity arose in this style of market trading and the next major step taken was to standardise the terms of each contract as well as the market practices. As trading in forwards or futures contracts increased and became a popular method of investment the entry of other commodities was encouraged.