Nations and people were severely influenced by commodity market through all their history. It has an impact on all states. For example, rice was traded in Asia 6 thousand years ago. The shortage of certain products provoked several wars and revolutions. In this article we will tell you what kinds of commodities trading exist and what was their role.
What commodity market is
- The food products are:
- products of agriculture;
- marine fisheries;
- semi-finished products and certain finished goods derived from them.
The main positions in the world food market are grains and processed products, oilseeds, vegetable oils, fats, meals, vegetables and fruits, meat and meat products, dairy products, coffee, cocoa, tea, sugar, fish and seafood.
In recent years, there has been a strong trend towards an increase in food trade ready for consumption. The main exporters of food of the country with commodity market economy – more than 70%.
Many food products are traded on exchanges. And prices in over-the-counter trade are formed on the basis of exchange quotations (wheat, corn, coffee, sugar, some kinds of seeds, etc.).
Some peculiarities of commodities trading
Some goods are sold at auctions that determine the world prices for them (tea, fish, vegetables, fruits, etc.). For certain food products, the world prices are the import or export prices of the main importers or exporters. For example, prices for nuts, dried fruits, honey are determined in the London market; On certain types of fodder, vegetables and fruits – in the Parisian wholesale market or at import prices in Germany.
Fragmentation of producers and consumers of food products contributed to the development of an electronic form of concluding transactions, in which the exchange of messages is equivalent to the signing of contracts. When buying and selling large quantities of goods, this form of trade organization is also used as tenders.
Prices for food products are characterized by considerable instability due to the influence of various factors (weather, seasonal demand and supply, speculative exchange transactions, etc.). Price fluctuations can be up to 100% per year, 10-13% per month.
Strong influence on prices has competition from artificial and synthetic substitutes. The dynamics of world prices largely depend on foreign trade policy (tariff and non-tariff regulation, subsidies, etc.).