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• Stephen Cooper

Commodity Exchanges

Trading commodities on the commodity exchange.

What is a ‘commodity exchange’? It is a place where the buying and selling of commodities take place between buyers, sellers and brokers, who enable both the parties to agree on a deal for a commission. Commodity exchanges are spread across the world and trading takes place on a wide array of areas such as cotton, wheat, spices, tobacco, gold, oil, pigs, corn, lumber and many more. Here are a few major commodity exchanges in the US.

• Chicago Board of Trade
• New York Mercantile Exchange
• New York Board of Trade
• Chicago Mercantile Exchange
• Kansas Board of Trade
• Minneapolis Grain Exchange
• Winnipeg Commodity Exchange

The first commodities market has to be the market places of the ancient Greeks, Romans, Sumerians, Egyptians and the people living in the Indus-Valley. The system of barter is age old and people used to come to the market to give what they had to offer and take home what they needed. In the earlier days, market systems were built around trading gold or silver for spices, cloth, wood and weapons, most of which had standards of quality and timeliness.

Commodity market trading started in US with the trading of agricultural products. In 19th century US, trading started in commodities such as and wheat, corn, cattle and pigs. It was only much later that markets in other areas started to come up.

The globalization of economy, capitalism and the Internet has played a definite role in making commodity trading more and more popular. While there was a time when only people in the trade used to carry out business, today even speculators and investors enter the market with the sole intention of buying at a lower price and selling at a higher price so that they can make a big profit.

Commodity exchanges are thus here to stay. In fact, it looks like, more and more such exchanges are going to be set up in the future across the world. People are realizing that there is a lot of money to be made at commodity exchanges.