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The Main Commodity Sectors

Energy Complex: this group includes crude oil and its products, natural gas, coal and power. They are the most heavily traded commodities and are highly liquid. The recent CO2 emissions market, which is highly correlated to power market, is reaching his potential and becoming highly liquid too. Therefore, some of them represent a large component of most commodity indices traded by investors, hedge funds and CTA. OPEC policy is just one factor behind prices.

Precious Metals: the most important precious metals are gold, silver and the platinum group (platinum, palladium, rhodium, iridium, osmium and ruthenium). Investors value these metals as a safe physical holding. Precious metals are very important to the jewellery business but are also frequently used in industrial processes. Prices are affected by US dollar trends and speculation.

Industrial Metals: the key industrial metals are copper, aluminium, zinc, nickel, lead and tin. Industrial or base metals are found in much greater quantities than precious metals. They are used much less in the jewellery business, but are often essential for industry. Not all base metals consumed are derived  from primary sources such as ores and minerals. Depending on the metal, a considerable amount comes from recycled or scrap sources. Prices therefore depend heavily on the state of the economy.

Strategic Metals: these are all metals (such as mercury, selenium, titanium, chrome, vanadium, etc...) which are produced and used in smaller quantities than other metals. Typically metals in this category are used for specialist alloys, in the electronic industries and for chemicals.

Plastics: this group includes polypropylene and linear low density polyethylene. Plastics contracts have been traded at LME - London Metals Exchange - since may 2005.

 

Grains & Oilseeds: this group includes coarse grains (such as corn, barley, oats, sorghum, rye, millet), wheat, rice and oilseeds (such as soybean, cottonseed, peanuts, sunflower seeds, rapeseeds, oil palm, copra). Most coarse grain production is fed to livestock and poultry. Wheat is versatile grain and the market is quite complex. The world production of rice is almost exclusively consumed by humans (over 95% of the crop). Oilseeds are produced almost exclusively foe two products which are obtained by crushing the seeds: meal, for high protein livestock feed suppplements; oils for edible consumption and for industrial use in paints and plastics.

Soft Commodities: the soft commodities include sugar, coffee, cocoa, pepper, citrus, fruits, tea, rubber, cotton and silk. The distinctive feature of this heterogeneous group of commodities is that they are renewable. As for grains and oilseeds, soft commodities prices are closely linked to weather patterns.

Livestocks: this group includes live cattles, live hog, feeder cattles and frozen pork bellies.

 

Shipping: this market is functional to transportation of all the commodities described above. There are two main types of shipping markets: the tankers market, which is focused on chartering dirty (crude oil) and clean (refined oil products) tankers; the dry cargo market deals with almost every type of cargo (container ships, bulk carriers, ore carriers and LNG carriers).

 
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