The volatility of the stock market has led investors to seek out new opportunities like commodity futures.  In order to harness the power of corn and gold for your personal finances, you must understand how to find commodities prices and research commodities recommendations.  

Explaining Commodities and Futures

The term commodity refers to a broad range of agricultural and mining products lumped into five categories.  Commodities traders move contracts of grains, energy, metals, softs and livestock each day on behalf of their clients.  A newcomer to the commodities market should understand that the commodity itself is only part of the equation.  

The commodities contracts used for investment purposes are called futures.  Futures are traded on markets separate from the traditional stock market due to the unusual nature of this financial tool.  Instead of the singular investment made by a stock holder in a company, a futures contract is an investment in an exchange between businesses and suppliers.  

The dynamic between a food producer and a farmer acts as a good example.  Company X cans fruits and vegetables for distribution at thousands of grocers throughout the United States.  In order to keep supplies up, Company X purchases corn from Farmer Y on a regular basis.  The futures contract in question is a promise of a certain tonnage of corn, the level of freshness and quality along with an expected delivery date.  This simple example is made more complex when the futures contract is available on the market for outside manipulation.  An aggressive trader can purchase the contract from Farmer Y and sit on the commodity until prices increase.


Traders in Commodities Futures

The primary trader of commodities futures in the United States is the business community.  The volume of goods available through futures contracts is irresistible to the average big-box retailer or chain store.  Instead of purchasing smaller pallets and shipments of raw materials, a chain grocer can acquire a futures contract of various goods at lower per-unit prices.  The commodities market is also beneficial to the supplier in that it is a welcome alternative to the days of “going to market.” While futures contracts can be manipulated, the market is stable enough to offer an incentive to farmers and other material suppliers.  

The futures market has become incredibly lucrative for speculators and aggressive investors attuned to commodities prices.  Since futures contracts are traded between buyers and suppliers on the futures market, investors can acquire these contracts from suppliers without much trouble.  Futures speculators acquire these contracts to take advantage of the ongoing demand for raw materials.  

In the case of Company X and Farmer Y, Investor Z can head off the initial transaction by acquiring the futures contract on the market.  Investor Z’s holdings of corn and other commodities will be sought after by Company X and competitors, creating increased demand for staple items.  The acquisition of futures contracts can be used to drive market value upward temporarily, ensuring large profits for speculators in the process.  While the market manipulation may seem unseemly to some investors, speculators are allowed to conduct these trades as long as no insider trading laws are broken.  

The Job of the Commodities Trader

Every speculator and business investing in the futures market needs a commodities trader to guide them through the market and to offer commodity futures quotes.  While day traders may be successful on the stock market, the futures market is too complex and unwieldy to navigate without the help of a qualified advisor.  The job of a commodities trader is to offer sound financial advice to each of his clients about buying and selling contracts on a daily basis.  

The rigorous education and certification process for a commodities trader and commodity brokers show the difficulties of finding deals in the futures market: for one thing, brokers must learn to fully understand commodity futures charts which determine price variances and prices can vary greatly.  The National Futures Association© (http://www.nfa.futures.org/) is the oversight body for all commodities traders in the United States.  Prospective traders must pass through the NFA’s licensing process before making a single trade.  The NFA and federal mandated Series 3 Exam are designed to show a commodities trader’s understanding of rules and regulations guiding the trade of commodities.  After the completion of these certifications, a commodities trader is likely off to Chicago or New York City to work in the major futures markets.  

Newcomers to the futures market must find commodities traders with their best interests at heart.  The best traders run several market analyses weekly or monthly to offer accurate details on futures trends.  A commodities trader should also speak candidly about the chances of success or failure in commodities, protecting his clients from obviously bad decisions.

The biggest peeve of investors getting into the commodities trade is over-aggressive sales pitches by commodities traders.  Some brokers are encouraged by their employers to push additional trades and financial tools on account holders to earn more money in commissions.  Long-term investors interested more in riding out the future growth of commodities should look for brokers more interested in sound investments than upselling their clients.  

Finding Commodities Prices Online

The pre-eminent source for finding commodities futures quotes, commodities charts, and prices is Bloomberg© (http://www.bloomberg.com).  The financial news network founded by New York City Mayor Michael Bloomberg covers all aspects of market activity including stocks and futures.  The futures section of the Bloomberg© website is effective in showing market trends and raw data in multiple formats.  An inexperienced trader simply looking for the day’s crude oil or cotton activity could look at the simple listing on the futures market main page.  Veteran commodities traders can use the graphs and charts deeper in the Bloomberg© website to look at weekly, quarterly and yearly growth in particular market sectors.  

Newcomers to the futures market should have multiple sources of information if there are technical difficulties or glitches.  CNN Money© (http://money.cnn.com) is the ideal landing spot for users trying to find the ups, downs and closing prices for futures contracts each day.  Traders looking for more substantial information can head to market websites like the Chicago Board of Trade© (http://www.cbot.com).  The Chicago Board of Trade© offers free newsletters and market recaps each day along with exchange news, market data and trend analysis used by thousands of traders each day.