Table of Contents
How do commodity trading companies make money?
Trading firms aim to maximise the price differential between the price they pay for (untransformed) commodities and the revenue they earn by selling (transformed) commodities. They work with producers to secure long-term, cost-effective supply.
How do commodity trading firms work?
Commodity trading firms are all essentially in the business of transforming commodities in space (logistics), in time (storage), and in form (processing). Their basic function is to perform physical “arbitrages” which enhance value through these various transformations.
How many types of transactions are done in trade of commodity market?
Types of Transactions in Commodity Markets: Broadly speaking there are two types of transactions — Cash and Futures. The commodity markets, therefore, have the characteristics of organised markets. In some commodity markets only cash contracts are executed but generally commodity markets are future markets.
What are the main classifications of commodities which can be traded?
Commodities that are traded are typically sorted into four categories broad categories: metal, energy, livestock and meat, and agricultural. For investors, commodities can be an important way to diversify their portfolios beyond traditional securities.
How much do commodities traders make?
The salaries of Commodities Traders in the US range from $32,680 to $1,131,376 , with a median salary of $202,318 . The middle 57\% of Commodities Traders makes between $202,320 and $509,626, with the top 86\% making $1,131,376.
What are commodity contracts?
A commodity futures contract is an agreement to buy or sell a particular commodity at a future date. The price and the amount of the commodity are fixed at the time of the agreement. Most contracts contemplate that the agreement will be fulfilled by actual delivery of the commodity.
What is a buyer of commodity or service called?
Answer: Commodities Speculators The second type of commodities trader is the speculator.