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

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

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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