Soft commodities consist of sugar, cocoa, coffee, orange juice and cotton.
Sugar
Persons have been using sugar for over two thousand years, when it was originally reserved for the extremely wealthy. Currently, sugar is one of the most heavily traded commodities globally.
Sugar commodity contracts expire in March, May possibly, July and October and a one particular point movement on a commodity CFD contract is worth USD5.60. So if a trader chose to go extended on a single sugar contract, and its worth rose by 25 points, he would make a profit of USD140 (USD5.60 per point x 25).
Cocoa
Cocoa was found by the natives of Central America over three thousand years ago, where it was a luxury for the rich. These days, most of the world's cocoa is grown in the Ivory Coast, Ghana, Indonesia, Brazil, Ecuador and Nigeria. This means that when there is turmoil in those regions, the cost of cocoa rises due to the expected disruption of provide.
Cocoa contracts expire in March, May perhaps, July, September and December. A 1 point movement in a commodity CFD contract is worth USD5.
Coffee
Coffee was originally discovered over two thousand years ago in Ethiopia. From Africa, coffee produced its way to the Middle East and into coffee homes, exactly where it was introduced to travellers who spread its use beyond the region.
Coffee contracts expire in March, May possibly, July, September and December. Coffee commodity trading contracts are worth USD1.88 per single point movement.
Orange Juice
Orange juice is a new commodity on the markets - as orange juice was traditionally consumed as a fresh juice, it had a short shelf-life and was, consequently, susceptible to value shocks due to supply disruptions.
Freezing orange juice began in the 1940s and then became the business regular, the longer shelf-life turning it into a tradeable instrument.
Cotton
Cotton was discovered over 5 thousand years ago and was one particular of America's to begin with money crops. Cotton is a incredibly influential commodity due to its wide range of utilizes and contributes to a large volume of commodity trading.
Cotton contracts expire in March, Could, July, October and December and a one particular point contract movement is worth USD2.50.
How to trade commodities
Commodity trading is normally performed with futures contracts, which are agreements that the commodity will be delivered at a certain time in the future at an agreed-upon cost. The quantity, excellent, time and spot of delivery are all standardised elements of the contract the only variable is the price tag.
In contrast to trading shares, which can only be purchased in the hope that the share price will rise and the trader will make a profit by selling the shares at a greater price tag, can be short sold, meaning that a trader can make a profit in a falling market place by selling a futures contract and obtaining it back at a lower price.
If a trader chose to go brief on coffee and the price fell by 50 points, he would make a profit of USD94 (USD1.88 x 50 points).
