Before the advent of the industrial revolution, trading mainly took place with agricultural commodities such as corn, maize, oats, wheat, livestock, hogs, and pigs. In 1848, the world’s oldest futures exchange was formed and it was named the Chicago Board Of Trade [CBOT]. Thereafter, many such exchanges were formed all around the world. The trading is done by contracts, which include
- spot trading, where the delivery takes place immediately or in minimum time,
- forward contract, where the buyer and seller agree to a price for a commodity, which is to be delivered at a mutually agreed date and quantity, and
- a futures contract, where the conditions are the same as the forward contract but are transacted through a futures exchange.
There are many agricultural and industrial commodities now being traded in the commodities market. The list of the most common commodities and the exchanges they are normally dealt through are given below:
- Crude Oil and derivatives – The most commonly traded commodity is Crude Oil and its various derivatives such as heating oil and gasoline.
These commodities are mostly traded in the New York Mercantile Exchange [NYMEX], ICE Futures, the Dubai Mercantile Exchange [DME], and the Central Japan Commodity Exchange [C-COM].
- Coffee – The second most traded commodity is Coffee [value wise]. Coffee is mainly traded through the New York Board of Trade [NYBOT], the Kansai Commodities Exchange [in Osaka, Japan], the Singapore Commodities Exchange [SICOM], and Euronext [London].
- Agriculture – Common commodities in agriculture include wheat, corn, maize, oats, rice, soybeans, and they are traded in the Chicago Board of Trade [CBOT], the Kansai Commodities Exchange [in Osaka, Japan], the Risk Management Exchange [RMX-in Hannover], the Minneapolis Grain Exchange, the Winnipeg Commodity Exchange [WCE], The Tokyo Grain Exchange [TGE] and Euronext.
- Animals and Animal Products – Animals and animal products such as live and feeder cattle, beef, frozen and fresh pork bellies, and eggs are mainly traded in the Chicago Mercantile Exchange [CME], Euronext, the Risk Management Exchange [RMX-in Hannover], and the Central Japan Commodity Exchange [C-COM].
- Cocoa, Butter, Orange juice, and Sugar – Items like cocoa, butter, orange juice, and sugar are also commonly traded in the New York Board of trade [NYBOT] and Euronext.
- Metals – Metals such as aluminum, nickel, copper, lead and ferrous scrap are mainly traded in the New York Mercantile Exchange [NYMEX], the London Metal Exchange [LME], the Shangai Futures Exchange [SFE], the Central Japan Commodities Exchange, Hedgestreet Exchange [in California], and the Tokyo Commodities Exchange [TOCOM].
- Precious Metals – The other commonly traded commodities are precious metals such as gold, silver, and platinum and they are traded in the New York Mercantile Exchange [NYMEX], the Brazilian Mercantile and Futures Exchange [BMF], the Dubai Gold and Commodities Exchange [DGCX], the National Commodity Exchange Limited [in Karachi, Pakistan] and the Tokyo Commodities Exchange [TOCOM].
- Plastic – Plastic is traded in the London Metal Exchange [LME] and the Dalian Community Exchange [DCE-China]
- Natural Gas – Natural gas is traded in the New York Mercantile Exchange [NYMEX] and ICE Futures.
- Bio-fuels – Bio-fuels is another upcoming commodity and is now being traded in the Brazilian Mercantile and Futures Exchange [BMF], the Bursa Malaysia [MDEX], the Chicago Board of Trade [CBOT], the Chicago Mercantile Exchange [CME], and the New York Board of trade [NYBOT]
These exchanges have now identified the key commodities, which are available in their region or are required there and hence have started specializing in trading in them.