Taking Advantage of Commodity Futures as a Trader

Commodity futures are an interesting type of speculative investment.

Before the introduction of stock index futures and forex trading, speculative traders had few options other than commodity futures.

In this article, I’d like to discuss the most important commodity futures contracts.

Commodity futures have origins in agriculture

The first commodity futures were traded on the Amsterdam Stock Exchange in the 18th century.

Commodity futures experienced a heyday in the second half of the 19th century after the Chicago Board of Trade was established in the US in 1848.

Forward contracts on commodities were also traded in other countries.

Today the most important exchanges for commodity futures are in London, Chicago, and New York, where the contracts trade almost exclusively electronically.

Commodity futures first emerged as a type of insurance for farmers, enabling them to get guaranteed prices for their agricultural goods.

The first commodity futures were for cotton and wheat.

Over time, the futures were extended to many other products that traded with sufficient volume.

Commodity futures are currently available for the following products:

SoftsMeats Grains
CoffeeLean hogWheat
CocoaLive cattleCorn
CottonPork belliesSoybeans
SugarFeeder cattle  Soybean meal
Orange juice
 Soybean oil

 Rough rice
Energy products MetalsOats
Crude oilGold 
Heating oilSilver 
Natural gasPalladium 

Commodity futures are often weather-sensitive

As a trader in commodity futures, you always have to keep an eye on weather conditions for the products you trade.

For example, periods of frost can have a major impact on the price of coffee and orange juice.

Droughts can lead to the failure of grain crops.

Limit moves are a special feature of the commodity futures market. A limit move is the maximum amount of change that the price of a commodity futures contract is allowed to undergo in a day, set by an exchange.


Commodity futures are an excellent alternative or supplement to stocks, forex, and financial futures, but you should keep in mind that these markets are mostly traded by specialists and professionals.

Each of the commodity markets has its own characteristics, and some markets, such as orange juice and oats, have very low daily volume, which can pose an additional risk for traders.

If you have any questions about commodity futures, please post it in the comments section below.

Read more:

Leave a Comment