1. Commodities present good diversification for traders, since commodity prices are built around the moving and delivering of physical assets.
2. Traders enter an exciting market with suppliers, merchants and large buyers which protect their prices on future deliveries, and lock in key strategic supplies. At maturity, each ‘financial trade’ gives rise to the delivery of a commodity cargo somewhere in the world.
Coffee is one of the world’s most important cash commodities as we all enjoy the aroma and taste of a good espresso. The coffee tree grows in tropical regions between the Tropics of Cancer and Capricorn in areas with abundant rainfall, year-round warm
temperatures averaging about 70 degrees Fahrenheit, and no frost. Seasonal factors have a significant influence on the price of coffee.
Cocoa, or “food of the Gods” as the Spanish called it, is the common name for a powder derived from the fruit seeds of the cacao tree. The cacao tree requires a hot and rainy climate in order to thrive. Production is usually confined to areas not more
than 20 degrees north or south of the equator.
Because of its widespread use, sugar is one of the most heavily traded commodities in the world. Sugarcane is cultivated in tropical and subtropical regions around the world roughly between the Tropics of Cancer and Capricorn. It grows best in hot, wet
climates where there is heavy rainfall followed by a dry season.
Cotton was discovered more than 5000 years ago, and has been one of the more influential commodities given its widespread use in different products. Cotton is a soft natural fiber that grows around the seeds of the cotton plant which requires a large
amount of water.