Commodity Futures can be a great tool for investors to get direct exposure to Commodities. In this video I chatted with the President of Gramza Capital Management, Inc., Dan Gramza on how Commodity Futures are the best tool for traders or investors to get direct access to Commodities.
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Agricultural contracts were the first futures traded in the United States. In 1848, farmers and merchants came to Chicago to set a price on grains, bringing life to the commodities markets. Today, the agricultural market is global; accessible electronically almost anywhere and used by individuals, farmers, commercial firms, large corporate companies and government institutions.
This mix of market participants has created one of the most active, liquid and vibrant markets in the world for corn, wheat, soybeans, lean hogs and live cattle. Other agricultural (Ag) commodities include lumber, milk, cheese and more.
The Agricultural markets are dependent on the supply and demand dynamics of the underlying commodity, which can shift and change based on weather conditions, politics, disease, and shipping and freight issues. Fluctuations in these factors can impact the price volatility of the markets.
Given that the world population is expected to top 9 billion people by 2050 (according to the United Nations), supply and demand will be the key factor for the agricultural markets and the food companies that depend on them.
For traders looking for a truly global market, agricultural futures is an asset class that can help diversify your portfolio.
Information in this post came from CME Group.
If you enjoyed this video here are more videos on the Benefits of Futures:
Using Micros For A More Precise Hedge On Your Portfolio
Pattern Day Trader Rule Doesn’t Apply To Futures
Explaining Physical & Cash Settlement
Bitcoin Futures vs Bitcoin Spot
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