Many investors have tried their hand at the lucrative international commodities market with varied success. But without the right training and education it may not be a good option for beginners whose only goal is to make quick profits. Most brokers in the commodities market are controlled by powerful regulators such as the SEC ( Securities and Exchange Commission) and this goes to minimize exposure to loss.
With the right information, an investor is able to recoup the initial capital outlay. The more popular commodities include wheat, cocoa, sugar and oil. Metals include copper, silver and of course gold.
It is important for investors to choose the right broker as there are many whose focus may not be the same. Some brokers choose to focus on metals while most do not actually specialize in any particular market dealing also in stocks and options.
Commodity prices depend on the respective economic conditions that prevail in the commodity's market. For example, the wildfires that raged in Russia in mid-2010 caused an upsurge of prices in the wheat market. Russia is one of the largest producers of wheat in the world and due to the fires, the Moscow government decided to ban the export of wheat for a few months into December. This caused global wheat prices to go up from about $680 to more than $700. This year, the price of wheat front futures has been fluctuating between $800 and $600 on the global markets.
Oil is by far the most watched commodity and is volatility makes it attractive for investors with a high risk appetite. One of the major players is the Organisation of Petroleum Exporting Countries which can affect its price by announcing an increase in barrels produced per day.
Bullion gold is also a very attractive option for new investors due to the safe-haven value attached to it. It is used to hedge risk and its price fluctuates according to the economic sentiments in Wall Street and the other big financial markets. Once the economic outlook looks down, gold prices go up.