Pork bellies, live cattle, Durham wheat, weather forecasts from Brazil, price supports for exports to Asia. Welcome to the world of trading agricultural commodities. Trading agricultural commodities takes place under two general categories, agricultural (grains, and food and fiber) and livestock and meat. Agricultural commodities are traded in the commodities futures markets. Here is a sample of agricultural commodities and where they are traded:
Grains, Food and Fiber |
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Commodity |
Primary Exchange |
Minimum Quantity |
Symbol |
Corn | CBOT | 5000 bu | C/ZC (Electronic) |
Corn | EURONEXT | 50 tons | EMA |
Oats | CBOT | 5000 bu | O/ZO (Electronic) |
Rough Rice | CBOT | 2000 cwt | RR |
Soybeans | CBOT | 5000 bu | S/ZS (Electronic) |
Rapeseed | EURONEXT | 50 tons | ECO |
Soybean Meal | CBOT | 100 short tons | SM/ZM (Electronic) |
Soybean Oil | CBOT | 60,000 lb | BO/ZB (Electronic) |
Wheat | CBOT | 5000 bu | W/ZW (Electronic) |
Milk | Chicago Mercantile Exchange | 200,000 lbs | DC |
Cocoa | ICE | 10 tons | CC |
Coffee C | ICE | 37,500 lb | KC |
Cotton No.2 | ICE | 50,000 lb | CT |
Sugar No.11 | ICE | 112,000 lb | SB |
Livestock and Meat |
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Lean Hogs | Chicago Mercantile Exchange | 40,000 lb (20 tons) | LH |
Frozen Pork Bellies | Chicago Mercantile Exchange | 40,000 lb (20 tons) | PB |
Live Cattle | Chicago Mercantile Exchange | 40,000 lb (20 tons) | LC |
Feeder Cattle | Chicago Mercantile Exchange | 50,000 lb (25 tons) | FC |
Weather in the Ukraine, Brazil, and the North American Great Plains
It is often quite possible to profit from the news in day trading agricultural commodities. Traders often wait for agricultural reports in order to understand where fundamentals of supply and demand are going. Although food is consumed locally it may have been produced anywhere in the world. Certainly prices across the globe reflect the ability to transport agricultural products virtually anywhere, if the price is right. The final price of a commodity depends upon supply and demand. If a drought threatens wheat production in the Ukraine or unusually heavy rains threaten to destroy much of Brazil?s soybean harvest, prices are bound to go up. In trading agricultural commodities, keeping an eye on the weather forecasts is part of the job. Likewise, if American consumption of beef products suddenly falls there may be more supply of live cattle and feeder cattle than demand and the price will fall. Those trading agricultural commodities such as wheat often consult United States Department of Agriculture agency reports such as the Wheat Outlook. This report looks at supply, use, prices, and trade for wheat, including supply and demand prospects in major importing and exporting countries. The report shows United States wheat information by class. The November 15, 2012 report starts as follows:
?Projected U.S. wheat ending stocks for 2012/13 are lowered 44 million bushels as higher feed and residual disappearance more than offsets a reduction in projected exports. Production for 2012/13 is raised 1 million bushels based on the latest estimate from the September 30 Small Grains report. Feed and residual use is projected 95 million bushels higher reflecting the September 1 stocks that indicated higher-than-expected June-August disappearance.? – etc.
Making a Profit in Trading Agricultural Commodities
With precise estimates of crop forecasts and demand issues, trading agricultural commodities over the longer term becomes a matter of fundamental analysis. However, market reaction to breaking news and reports often leads to market inefficiency at which times technical analysis of price patterns is often the better guide to making a profit trading agricultural commodities.
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