What is a Commodity market Flashcards
(10 cards)
What is a commodity market?
A marketplace where raw materials (commodities) are bought, sold, and traded
What are the two main types of commodities?
Hard commodities (e.g., oil, metals) and soft commodities (e.g., wheat, coffee, livestock).
What is a spot market?
A market where commodities are traded for immediate delivery at current prices.
What is a futures market?
A market where contracts are made to buy/sell commodities at a future date and fixed price.
Name three major commodity exchanges.
CME Group, NYMEX, LME.
who are hedgers in commodity markets?
Producers or consumers who use futures to lock in prices and reduce risk.
Who are speculators in commodity markets?
Traders aiming to profit from price movements without using the actual commodities.
Who are arbitrageurs?
Participants who exploit price differences in different markets for profit.
What factors influence commodity prices?
Supply and demand, geopolitics, weather, inflation, and currency movements.
Why are commodity markets important for the economy?
They influence inflation, guide policy, and affect trade balances, especially in resource-rich countries.
