Commodities are products that are bought and sold in large quantities around the world. There are several commodities that are traded on different exchanges. Continue reading to learn about the 10 most traded commodities in the world, how they are traded and their importance.
How Are Commodities Traded?
Commodities are traded on major exchanges such as ICE, CME, and others. The trading can involve contracts called futures and options. These contracts regulate the price to purchase or sell the commodity after some time. Sometimes, deals can happen privately outside the exchanges. This is known as over-the-counter trading. The amount of trading shows how popular a commodity is. This implies that many people buy and sell them everyday.
10 Most Traded Commodities in the World
1. Brent Crude Oil
Brent Crude Oil is the most traded energy commodity. Also, it is the most well-known oil used in the world. It is traded mainly on ICE. This is the Intercontinental Exchange. About 246 million contracts were traded on ICE in the year 2022. Moreover, each contract was for 1000 barrels of oil. Here, a barrel is said to be 159 litres. Brent is easier to produce and transport than other oils. Thus, it is a benchmark for oil prices across the globe.
2. West Texas Intermediate (WTI) Crude Oil
WTI is also another large traded commodity. It is mostly utilised in the U.S. Also, it is traded on NYMEX. This is owned by the CME Group. Trading volumes increased again after a price crash in 2020. Moreover, the average was about 1870 contracts daily in June 2020. Similar to Brent, each contract goes for 1000 barrels. WTI is stored inland. This causes some logistics issues. However, it still remains as one of the most traded commodities.
3. Steel
This is used for construction, cars, and many other products. Also, it is traded on Shanghai Futures Exchange and London Metal Exchange. Over 530 million steel futures contracts were traded on the Shanghai exchange alone in the year 2022. Most often, a contract is for 20 short tons of steel. At the same time, a short ton is 2000 pounds. However, steel types such as scrap steel, rebar and hot-rolled coil are traded differently in various regions.
4. Copper
This metal is used in electrical wiring, electronics, and construction. LME (London Metal Exchange) and COMEX are the platforms for trading this metal. Also, about 37 million contracts were traded on LME in 2022. Here, one contract on LME is for 25 tonnes. It is 25000 pounds on COMEX. Moreover, this metal is seen as a vital industrial tool. Thus, it is always in high demand worldwide.
5. Iron Ore
Iron Ore is used to make steel. It is one of the most essential metals in the world. Moreover, Singapore Exchange (SGX) is the largest platform where iron ore is traded. SGX traded over 12 million contracts in the year 2022. Also, each contract is for 25 tonnes of iron ore. Along with this, iron ore prices rise and fall with global steel demand.
6. Gold
This is known to be a status symbol and a safe investment across the world. It is mainly traded on LME and COMEX. Also, almost 270,000 contracts were traded on LME in the year 2022. Each contract accounts for 100 troy ounces of gold. Despite being valuable and popular, gold is not the most expensive metal to trade. There are many people who buy gold as a form of security till date.
7. Silver
Silver is used in jewellery, electronics, and photography. It is traded on LME. Also, London Bullion Market serves as the platform for its trading. 70,800 silver futures contracts were traded on LME in the year 2022. Moreover, one contract is for 5000 troy ounces. It is often termed as the “poor man’s gold”. Thus, it is used as an investment and for industrial purposes. The demand for silver however, remains high worldwide.
8. Coffee
This item is one of the most popular drinks across the globe. Also, it is one of the most traded soft commodities. It is traded mainly on ICE (Intercontinental Exchange). About 1.76 million coffee futures contracts were traded in July 2022. Each contract is for 37,500 pounds. This is roughly 250 bags of coffee. Moreover, coffee has a huge global demand. The coffee industry in the U.S. alone is worth 18 billion dollars yearly. Thus, coffee has a high trading volume. This makes it favourable among traders.
9. Soybeans
This item is used in many food products such as tofu and soy milk, soybean oil among others. It is traded on the Chicago Board of Trade (CBOT). Over 39 million soybean contracts were traded in 2022. Also, each contract is for 5000 bushels. This is roughly 136 metric tonnes. Soybeans are an important crop and have high trading volume. They are grown mainly in the U.S., Brazil, and Argentina.
10. Cocoa
Chocolate and other food ingredients are derived from cocoa. It is also traded on ICE. Moreover, over 1.44 million cocoa futures contracts were added in July 2022. Each contract accounts for ten metric tons of cocoa beans. Also, about five million tons of cocoa beans are produced per year. Thus, traders and manufacturers favour cocoa beans for trading too.
Conclusion
These top 10 commodities are the most traded in the world. They include energy, metals, and agricultural products. There are also energy commodities such as Brent and WTI crude oil. These also lead the way in trading volume. Along with this, metals such as gold, silver, copper and others are also popular in the list. These commodities stay on top despite differences because they are essential for industry, trade, and daily life.
