Investing in Commodities
What is commodity investing?
Commodities refers to the products that the product has the same standard around the world. There was no qualitative difference between the products. It doesn’t matter who produces goods such as oil, rice, copper, natural gas, sugar, rubber, etc., wherever we buy commodities. The properties are similar. Any gas pump can run as well. Where to buy rice can be eaten as well. Where to buy sugar is sweet as well.
Therefore, a commodity is a commodity that does not have the competitiveness of differentiation. Like other products Causing manufacturers to not be able to set product prices Prices are based on demand – supply. Essentially, no matter who the manufacturer is This will create a global middle price.
So what are the drivers of commodity market prices?
Each commodity has different price factors. Severe price changes in a commodity market can occur when a commodity becomes scarce or overwhelming. But for the most part, the factors that influence almost every commodity market are demand and supply dynamics, however, there are other factors as well, such as the US dollar, alternative commodities and the climate.
Commodity supply can be affected by a variety of factors such as government interference, climate, war and others.
For example, on September 14, 2019, a drone-bomb attacked the world’s largest oil refinery in Saudi Arabia. As a result, the world’s oil production capacity is reduced to 5 million barrels per day. That volume represents nearly half of Saudi Arabia’s current output and accounts for 5 percent of the world’s oil production. Such an event caused the world oil price to rise to a record high.
When the market reopened on September 16, Bent crude oil prices jumped from 60.42 in the evening of September 13 to 72.19 when the market opened on September 16, representing a 19.4% jump in prices. And at the same time WTI crude oil prices also soared 15.5% from 54.70 to 63.28.
1. Soft Commodities
Soft commodities is a commodity that humans can produce Will be agricultural products such as rice, sugar, cattle, chicken ducks, pigs, soybeans, wool, rubber, palm oil, cotton, corn, coffee, etc.
2. Hard Commodities
Hard commodities are commodities that humans cannot produce themselves Must be extracted from underground such as crude oil, gold, silver metals, petroleum products (eg petrochemicals, Paraxylene, Benzene, Ethylene, etc.), oil related matters such as refining, iron, coal, etc.
Which is popular to be a product that can be tangible, whether Is gold, aluminum, lead, silver, various agricultural products or is it crude oil? Natural gas that you can choose conveniently. However, these products must be chosen based on their knowledge in order to create successful trading opportunities and profit from your investment.