Commodity Supply and Demand

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Commodity Supply and Demand

Fundamental analysis in commodity trading has to do with anticipating commodity supply and demand. Successful traders who sell commodity futures and those who buy commodity futures learn and follow the various aspects of commodity production. Gold futures are affected by the fact that gold mining companies are digging deeper for gold in developed countries and exploring in politically unstable regions of the world. Corn futures are affected by drought, flooding, and the worldwide acreage planted. Oil futures are affected by disasters such as the BP oil spill in the Gulf of Mexico. Commodity supply and demand is the basis of commodity price. Anticipated commodity supply and demand is the basis of commodity futures price. Commodity demand rises for industrial metals like copper and energy commodities such as natural gas during an economic recovery. Thus commodity supply and demand together determine commodity price. To understand how commodity supply and demand, as well as market factors, determine commodity prices a new trader ought to consider Commodity and Futures Training. For the more advanced trader in commodity options a course such as Options Training with Stephen Bigelow can be very useful.

Traders in commodities buy futures and sell futures. Buying puts, buying calls, selling puts, and selling calls on commodity futures is also done and can be profitable as well. Trading supply and demand has to do with fundamentals of the individual stocks, options markets, commodities, and futures of the equity market that one is trading. Technical trading has to do with anticipating the actions of others in the market. Unlike trading other equities basic supply in the case of commodities really has to do with just how much of the commodity there is for sale, not how much stock, for example, is available at a given price. Demand for agricultural commodities has to do with how many hungry people there are and how much they can pay for rice, wheat corn, milk, eggs, and meat. Demand for energy commodities goes with a thriving economy as well as severe northern winters. It drops during a recession and when a northern hemisphere January is mild.

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Commodity Supply and Demand

  1. 1. Commodity Supply and Demand By www.CandlestickForums.com
  2. 2. Fundamental analysis in commodity trading has to do with anticipating commodity supply and demand. www.CandlestickForums.com
  3. 3. Successful traders who sell commodityfutures and those who buy commodity futures learn and follow the various aspects of commodity production. www.CandlestickForums.com
  4. 4. Gold futures are affected by the fact that gold mining companies are digging deeper for gold in developed countries and exploring in politically unstable regions of the world. www.CandlestickForums.com
  5. 5. Corn futures are affected bydrought, flooding, and the worldwide acreage planted. www.CandlestickForums.com
  6. 6. Oil futures are affected by disasters suchas the BP oil spill in the Gulf of Mexico. www.CandlestickForums.com
  7. 7. Commodity supply and demand is thebasis of commodity price. Anticipatedcommodity supply and demand is the basis of commodity futures price. www.CandlestickForums.com
  8. 8. Commodity demand rises for industrial metals like copper and energycommodities such as natural gas during an economic recovery. www.CandlestickForums.com
  9. 9. Thus commodity supply and demandtogether determine commodity price. www.CandlestickForums.com
  10. 10. To understand how commodity supply and demand, as well as market factors, determine commodity prices a newtrader ought to consider Commodity and Futures Training. www.CandlestickForums.com
  11. 11. For the more advanced trader in commodity options a course such asOptions Training with Stephen Bigelow can be very useful. www.CandlestickForums.com
  12. 12. Traders in commodities buy futures and sell futures. www.CandlestickForums.com
  13. 13. Buying puts, buying calls, sellingputs, and selling calls on commodity futures is also done and can be profitable as well. www.CandlestickForums.com
  14. 14. Trading supply and demand has to do with fundamentals of the individual stocks, optionsmarkets, commodities, and futures ofthe equity market that one is trading. www.CandlestickForums.com
  15. 15. Technical trading has to do withanticipating the actions of others in the market. www.CandlestickForums.com
  16. 16. Unlike trading other equities basicsupply in the case of commodities really has to do with just how much of the commodity there is for sale, not howmuch stock, for example, is available at a given price. www.CandlestickForums.com
  17. 17. Demand for agricultural commoditieshas to do with how many hungry people there are and how much they can pay for rice, wheat corn, milk, eggs, and meat. www.CandlestickForums.com
  18. 18. Demand for energy commodities goes with a thriving economy as well as severe northern winters. www.CandlestickForums.com
  19. 19. It drops during a recession and when a northern hemisphere January is mild. www.CandlestickForums.com
  20. 20. Successful options trading in commodity futures is just as strongly related to commodity supply and demand as is buying and selling commodity futures. www.CandlestickForums.com
  21. 21. Buying options gives the buyer the option but not the obligation topurchase or sell if commodity futures price movement is beneficial. www.CandlestickForums.com
  22. 22. Selling options on commodity futuresentails the same set of risks as buying and selling stock options. www.CandlestickForums.com
  23. 23. It tends to be more profitable over the long run but can result in occasional substantial losses. www.CandlestickForums.com
  24. 24. In commodity options, just like stockoptions, it is the large investment houses and companies with deep pockets who typically engage in options trading of commodity futures. www.CandlestickForums.com
  25. 25. All trading in futures and options may ultimately depend upon supply and demand. www.CandlestickForums.com
  26. 26. However, the business of buying and selling at the optimal price is mostcommonly and most efficiently assistedby use of technical analysis tools such as Candlestick analysis. www.CandlestickForums.com
  27. 27. In the end everyone knows thefundamentals and it is the ability topredict the sum total of what othertraders will do that leads to profits. www.CandlestickForums.com

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