Commodities defined

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What do we mean by ‘commodities’?
Well, it's very simple really. There are two kinds: hard and soft

 

Hard commodities come from the earth

Metals (e.g. gold, platinum, copper, lead, zinc, tin, cobalt)

Energy (e.g. oil, gas, electricity)

Other (e.g. silicon, plastics, polymers)

Soft commodities we grow

Agricultural grains, food & fibre (e.g. wheat, corn, oats, soybeans, milk, coffee, sugar)

Livestock & meat

Other (e.g. palm oil, rubber, wool, paper)

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DIRECT OR INDIRECT?
Commodity price volatility is as much of an issue when dealing direct with a commodity market, as it is when a commodity market has an indirect influence (such as silicon in the manufacturing of windshields, or grain-feed in the production of chickens). 

BUYING OR SELLING?
Managing your commodity price risk is as equally applicable when buying as it is when selling. If your company produces, trades, or consumes commodities, then your profit margins are vulnerable to fluctuating markets. That means you’ll benefit from help in navigating and managing the price risks you face. 

 
 

Here’s an example: a breakfast cereal manufacturer is exposed to price risks from corncocoa and sugar to make the product, from paper and plastics for its packaging, from the energy used to power its factories, warehouses and offices, and from the fuel used in logistics. 

In fact, if you make cereal, we really should have a chat.