Trading Commodities
Commodities are the raw materials from which products are made. Examples include precious and industrial metals such as gold and copper, agricultural products such as wheat, fuel products such as crude oil and soft commodities such as coffee.
In our guides we look at what affects the price of each Commodity and how it can be traded. Let us know if there are other commodities that you would like us to cover.
Luckily, using spread betting or Contracts for Difference, you won’t need to worry about where to store a tonne of Cocoa beans! Your broker or market maker will quote a price which will move in close relation to the price of the underlying contract. Hence, you might see ‘Brent Crude March 2024’ quoted on your trading screen. This will typically be the next futures contract to expire.
Sometimes you will see more than one contract quoted. The number of contracts available will differ from commodity to commodity, as some are priced for regular delivery, like oil, while others are subject to annual or semi-annual harvests.
Be aware that you are exposed to the price of the ETF, not the cash commodity price, and the two can diverge over time as the costs of managing the ETF impact its performance.
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