Physical trading agricultural commodities
For hedging a flat price position or trading the Basis the futures market is needed to provide liquidity. Physical trading agricultural commodities contracts represent the underlying value of the commodity but physical delivery is taken on less than 1 percent of all the contracts traded. Because of this standardization the market is very liquid and contracts are traded onwards often and easily.
When a trader buys cash grains and hedges this with selling an equal amount of grain on the futures market the trader is long the basis. We will continue to work together closely with our partners to always have an answer to the needs of the market. In our previous blog posts, we wrote about the beauty and the challenges of growing crops. The basis is defined as the difference between the cash price in the local market and the exchange traded futures price of the same commodity. We take pride in the decades of experience of our individual partners and the powerhouse of knowledge that we have created.
Reliability of our prices: These contracts represent the underlying value of the commodity but physical delivery is taken on less than 1 percent of physical trading agricultural commodities the contracts traded. We take pride in the decades of experience of our individual partners and the powerhouse of knowledge that we have created. There are two ways to trade the Basis; you can go long the Basis or short the Basis. Because futures markets are so liquid, they are ideal for hedging physical trading agricultural commodities risk that comes from a physical position.
We commoditize the products as much as possible by working according to strict international rules and quality specifications. If you want to learn more about the agricultural market and other interesting terms such as market prices, futures contracts, and hedging, keep reading our articles and master your market knowledge. Agriculture holds a crucial role in physical trading agricultural commodities and we see ourselves as another step in modernizing the value chain.
Agriculture holds a crucial role in society and we see ourselves as another step in modernizing the value chain. We want to be the leading platform for soft commodity price information and change the agribusiness for the better. Commodities can be classified into four main groups:. Our mission is to take away all physical physical trading agricultural commodities perceived borders and give agribusinesses a platform to find and exchange information. Commodity exchange is an association, company, or any legal corporate body which provides an organized marketplace for trading in commodities.
Physical trading agricultural commodities can be classified into four main groups:. Worldwide there are many commodity exchanges specialized in operating with certain commodities. In contrast to cash commodity contracts there are futures contracts. Agriculture holds a crucial role in society and we see ourselves as another step in modernizing the value chain. Cash commodities are actual physical commodities that are delivered at the completion of a contract.
Traders in the physical market want to hedge their flat price position because local factors are easier to predict than global factors. By showing price changes intraday we make physical soft commodity markets function in the most efficient way possible. The trader takes a position on what he physical trading agricultural commodities the local market is going to do compared to the futures market.