The recent increase in world demand for
commodities, whether metals or food has resulted in some
spectacular increases in their prices and many investors have
turned to these markets in the hope of profiting from the increased
volatility.
Investor's favourites
Although most commodities are available to trade through
exchanges around the world, the investor's favourites haven't
really changed over the last few years with Gold, Silver and Oil
topping the list in terms of volumes. On the soft commodity markets
the most popular tend to be wheat, corn and probably soybeans.
Commodity Futures, like many other futures markets, can be very
volatile but unlike index futures often involve a physical delivery
of the actual commodity rather than a cash settlement. It is for
this reason that any investor, no matter how familiar with the
working of other markets, should do plenty of research before
trading ensuring that the market opening times, expiry date, last
day of dealing (also referred to as first notice day) and the lot
sizes are completely understood. Quite often the last day of
dealing is some time prior to the actual expiry of the contract and
failure to exit a position on time can end up becoming very
expensive.
If, for example, you were holding a long position in the Oil
market after the last day of dealing you could find yourself being
delivered a few thousand barrels of the black stuff! As with other
futures contracts, the exchanges have recognised the need for mini
contracts as well as standard size contracts to allow access to the
small and medium sized trading community.
Tip: Always give
yourself plenty of time to exit from the contract you are trading,
whether you wish to roll forward to the next contract month or
simply close your existing position to realise a profit or
loss.
Gold Futures
Gold is traded on the CME with the mini contract being
traded on the eCBOT exchange and is traded for February, April,
August, and October falling within a 23-month period; and any June
and December falling within a 72-month period beginning with the
current month.
Silver Futures
Silver is traded on the CME and, like gold, offers traders the
chance to trade using both standard and mini contracts. Contracts
are offered in January, March, May, and September falling within a
23-month period; and any July and December falling within a
60-month period beginning with the current month.
Brent Crude Oil Futures
Brent Crude Oil futures are traded on the ICE exchange and are
offered monthly throughout the year.
Wheat Futures
Wheat Futures are traded on the CME and are offered in both the
standard and mini sized contracts. The CME offer physically settled
contracts in the months of March, May, July, September and
December.
Corn Futures
Corn is a physically settled commodity that is traded on the CME
and also has both standard and mini contracts available. Like Wheat
futures it is traded in the months of March, May, July, September
and December.
Soybeans
Soybeans can be traded using the exchange standard or mini
contract and are also traded on the CME. Soybean Futures are traded
for January, March, May, July, August, September and November.
| Market |
Exchange |
Physical Settlement? |
Standard Lot Size |
Mini Lot Size |
| Gold |
CME |
Yes |
$100 PER LOT |
$50 PER LOT |
| Silver |
CME |
Yes |
$50 PER LOT |
$25 PER LOT |
| Brent Oil |
CME |
Yes |
$10 PER LOT |
N/A |
| Wheat |
CME |
Yes |
$12.50 PER LOT |
$1.25 PER LOT |
| Corn |
CME |
Yes |
$12.50 PER LOT |
$1.25 PER LOT |
| Soybeans |
CME |
Yes |
$12.50 PER LOT |
$1.25 PER LOT |
Further resources on Futures trading
Comparing Futures brokers
Below is a table of Futures brokers with a few key
account-opening criteria that we believe should be considered when
you are deciding which broker to open an account with.
Start comparing Futures brokers
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