A Ranking of Traded Commodities by Liquidity

Just like its Brent counterpart, its price is impacted by economic and geopolitical conditions. Much like soyabeans, the price of corn is heavily dependent on the demand for animal feed and biofuels, as well as the strength of the US dollar and weather patterns. Agricultural subsidies – particularly US subsidies – can also have an effect on prices. Corn production is currently heavily subsidised in the States, which provides a strong incentive for production and helps maintain global supplies. West Texas Intermediate (WTI) crude – referred to as US crudeon IG’s platform – is the second type of crude oil on our list.

1. And, once again, this is a commodity that was singled out for tariffs by the Trump administration this year – so US policy is likely to play a role in pricing aluminium.
2. However, as an alloy, its price is dependent on the cost of its constituent products and the costs of shipping them.
3. Soybeans serve as a significant source of protein for livestock feed and human consumption.
4. Prices received a boost from sanctions against Russia’s oil and gas exports following the country’s invasion of Ukraine, heightening worries about supply crunch.

On 8 March, the London Metal Exchange (LME) had to suspend nickel trading after the metal soared 70% in one day and briefly broke the $100,000 per tonne barrier. The volatile trading was later attributed to China’s Tsingshan Group, one of the world’s biggest nickel producers who bought large amounts to hedge its short bets. Slippage is the loss that occurs due to wide bid-offer spreads or price gaps that can occur in commodities that exhibit low degrees of liquidity. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

If you are looking to trade silver, note that its price movements are also closely correlated with gold. Commodities, such as wheat, corn, crude oil, and gold, are fundamental goods and essential materials traded on exchanges or speculated upon using https://www.forex-world.net/ derivatives contracts. These commodities encompass a wide range, from agricultural products to more challenging-to-extract raw materials. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate.

Crude oil: West Texas Intermediate (WTI)

Brent crude oil is a type of crude oil that is considered one of the key benchmarks for oil prices around the world. Its fluctuations directly impact transportation costs, energy prices, and stock markets. Geopolitical and economic conditions can heavily impact oil prices. For example, when the COVID-19 pandemic hit, various economies globally ground to an almost halt, and as a result, oil prices plunged as demand sank. As a result, steel prices have historically been fairly well correlated with global economic performance – generally rising and falling in line with economic output. However, as an alloy, its price is dependent on the cost of its constituent products and the costs of shipping them.

Despite there being a seemingly endless list of financial assets available to trade, you may be wondering, out of all these choices, what are the most traded commodities in the world. Swiss investment bank UBS forecast gold to average $1,700/ounce by end of this year due to higher interest rates and falling inflation. US crude West Texas Intermediate (WTI) price is typically less expensive than international benchmark Brent crude oil. However, WTI price has been catching up with Brent this year on the prospect of rising demand for US crude amid potential reduction on Russian oil due to the sanctions. However, in spite of commodities prices retreating in recent weeks, commodities remain some of the world’s most traded assets.

In July 2022, 1,756,010 Coffee Futures Contracts were traded on the ICE. In the US alone, the retail coffee industry is worth $18 billion annually. The enormous global demand makes coffee one of the most traded commodities in the world. For the commodities https://www.dowjonesanalysis.com/ exchange market to function, all producers must work to the same standard. A barrel of crude oil produced by ExxonMobil and Chevron should be at the same standard, so brokers, exchanges and buyers are indifferent to the source of the commodity.

Precious and Industrial Metals

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Accepts no responsibility for any use that may be made of these comments and for any consequences that result. The price of oil and electricity can affect the price of aluminium, as separating the element from ores is very energy intensive. Demand is driven https://www.forexbox.info/ by manufacturing and construction, so economic developments in economies such as China can have a big effect on its price. And, once again, this is a commodity that was singled out for tariffs by the Trump administration this year – so US policy is likely to play a role in pricing aluminium. Its composition can vary substantially dependent on the desired end use, so there is no agreed standard for the alloy.

China is the world’s largest importer of soybeans, accounting for over 60% of world trade. Meanwhile, Brazil and the US lead the way when it comes to soybean exports. J.P. Morgan estimated Brent crude oil to average $104 in 2022, while Swiss investment bank UBS expected the crude oil to average $125/bbl at the end of this year. When evaluating a commodity for tradability, volume and open interest are important metrics to watch. Volume is the total number of contracts that trade, and open interest is the total number of open long and short positions in a market. The more volume and open interest in a commodity, the less slippage.

When the oil market becomes highly volatile, it attracts more price speculators, which will increase both volume and open interest. This information has been prepared by IG, a trading name of IG Markets Limited. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.

However, this has waned in recent years as the US, which is not an OPEC member, has increased shale production. Brent crudeis one of the two major types of oil used to benchmark global prices, along with West Texas Intermediate (WTI). It is a high-quality ‘sweet light’ oil, meaning it has a low sulphur content and density, and is therefore relatively easy to refine into usable end products. It is drilled from oil fields in the North Sea’s Brent, Oseberg, Forties and Ekosfisk fields, off the shores of the UK and Norway. This proximity to the coast makes it relatively cost effective to transport internationally.

The majority of soyabeans are grown in the US, followed by Brazil, Argentina, China and India. As commodities are traded on many different exchanges around the world with varying ticker symbols and contract specifications, it’s tough to really calculate the trading volume. Also, many commodity deals are done over-the-counter in private agreements. Steel is the backbone of modern infrastructure, finding applications in construction, automobiles, ships, and much more. If steel demand slows, it can be an indication that demand for products, such as cars, is also on the decline.

Natural gas

‘Soft’ commodities, on the other hand, are agricultural products such as crops and livestock. WTI stands for West Texas Intermediate, as it primarily originates from the United States and influences North American energy prices. Its correlation with Brent crude often reflects global supply and demand dynamics.

However, since 2000 there have been significant fluctuations in price due to changing Chinese consumption. The country has rapidly urbanised – requiring vast amounts of steel – and experienced phenomenal economic growth. Because of this, Trump’s tariffs have also had an indirect effect on iron ore, with prices falling due to a reduction in demand. Commodities prices – from oil, natural gas, copper to gold and wheat – continued their robust performance in the first quarter of 2022 following Russia’s invasion of Ukraine in February. The resulting instability saw commodities prices rally to fresh multi-year highs.

In contrast, there were just 458,999 Steel Futures and Options Contracts traded on the London Metal Exchange in 2019. If you want to trade any of the commodities mentioned, or maybe some that aren’t mentioned in the list above, then you need to sign up for an online brokerage account. There are various factors to consider when looking for an appropriate broker, such as regulation and the platform’s ease of use. Below, we have picked out some of the top brokers that allow you to trade commodities. Aluminium is crucial in the transportation (aircraft), packaging, and construction industries.

The Russia-Ukraine war exacerbated supply woes after Russia required buyers in Europe to pay with ruble for its gas, prompting buyers to find alternative supply from the US. The great bull market in commodities from 2000 to 2014 attracted a great deal of interest to all raw material markets. The advent of new products, ETFs, and ETNs brought new participants to markets. Highly liquid commodities have less risk of slippage, not because they are more or less volatile, but simply because more people trade them. Copperis an important base metal because it is an exceptionally good conductor of both heat and electricity, and is also corrosion resistant and weatherproof. It is primarily used to manufacture electrical wire, pipes, roof tiles and industrial machinery.

Trading platforms

The bank viewed there was still room for another 10% to 15% move up in broad spot commodity indexes over the next six months. The US Energy Information Agency (EIA)  on 7 June forecast WTI to average $102.47 per barrel (bbl) this year, up from $68.21/bbl in 2021, but it is expected to ease to $93.24. Fitch Solutions on 7 July forecast WTI to average $102/bbl this year, up from $68/bbl in 2021.