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 The history of the modern commodity market starts a long time ago, around 1800s. At that time, in the United States, wheat and corn, cattle and pigs, were widely traded using standard instruments. Long before that, in the ancient Sumerian sheep or goats, pigs, rare seashells, or other items were used as commodity money.
Commodity markets are markets where raw or primary products are exchanged. People have looked for ways to standardize the trade of such items, to make the trade itself easier and predictable. Today, the majority of transactions continue to serve the same basic goal of stabilizing prices for commodity producers and their customers.
Commodities are raw materials, rather than finished products. For example agricultural commodities include crops like wheat and soybeans and even livestock. Minerals, energy and petroleum are also traded on commodities markets. The commodities markets increased their volume of trading in recent years. In 2007 the global physical and derivative trading of commodities on exchanges increased and reached over 1,684 million contracts. 25% of commodity trading was conducted in China and over 40% in United States. Economic studies based on evaluating the risk for 116 different commodities weighted equally since 1888, show that commodities have an approximate expected return of 5% in real terms. Top five commodity exchanges are New York Mercantile Exchange (USA), Tokyo Commodity Exchange (Japan), NYSE Euronext (EU), Dalian Commodity Exchange (China) and Multi Commodity Exchange (India). |
