Commodities

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Commodities market is a special market where transactions are negotiated (sale – purchase) of fungible goods (homogeneous), based on samples, such as agricultural products (wheat, corn, rice, soybeans, potatoes, meat), metals (copper, aluminum, zinc, precious metals etc.), tropical products (coffee, cocoa, sugar, citrus, etc.), forest products (timber), oil products (crude oil and its derivatives). In these places are formed both supply and demand of those goods and secure their course. In exchange, negotiation is not performed on some physical goods, individualized and presented as such at contracting (as in traditional auctions), but on the basis of representative documents, which establish ownership of the goods and its commercial image (a certain quantity of goods for a certain quality).

Commodities exchange market is serving as a benchmark for all transactions conducted with those goods, for all economic activity. This sets the price for the traded goods- the lifeblood of commercial transactions taking place in the country. The existence and functioning of a commodities market is based on the fulfillment of conditions relating to the supply and demand of goods, their prices, nature of goods, market information, etc. These conditions are, in fact, specific features of the commodities market, such as the offer should be significant in volume and must come from a sufficiently large number of bidders.

Stock market participants are informed about the availability of goods and the size of global demand. Also, they are able to trade under conditions of free competition. The risk of production and the commercial risk are reduced, especially in hedging operations. At the same time, it significantly reduces transport costs (the goods are directly moved from producer to consumer).