Trading activities go on in the global stock market around the clock. Unlike traditional markets, where traders and their customers exchange goods for money, the stock market trades and exchanges the value of commodities. This exchange of value may sometimes lead to an exchange of goods down the line as there are different layers of trade embedded in stock trading, especially with the majority of the most traded commodities.
Most commodities are raw materials. These raw materials are essential for production and service delivery. Any raw material can qualify as a commodity provided it has value and can be exchanged with other commodities or for money.
Why does the value of commodities differ?
Some commodities are more valuable than others due to the high level of demand for these commodities. Its importance to different production processes also affects their value. Investment also raises the value of commodities. Commodity investment is a practice where people buy certain amounts of stocks and trade them for a profit.
Commodity investment and other investment practices make the global stock market a multifaceted market that deals with different forms of trade daily. These trades are centered around value.
What commodities are the top traded commodities in the world?
Gold is a highly valued precious metal traded for many years. Most countries have gold reserves. Individuals who want to shore up their money against the effects of inflation and unstable market swings buy gold as a form of investment. The demand for gold far outweighs its limited supply hence its high value in the market.
- Crude Oil
Crude oil is one of the most valuable products on the stock market. Crude oil has several constituents necessary to meet the global demand for energy and fuel. Crude oil is the mainstay of the economy of many oil-producing countries. There is a rising consistent demand for crude oil which makes it a viable stock commodity. Crude oil prices are not consistent across the globe. Apart from the laws of demand and supply, other factors such as politics may affect crude oil’s investment potential.
Cotton trading is one of the most historical trades that is still highly relevant today. Clothing is essential for humans. Clothing comes from the fiber derived from cotton. The price of cotton largely depends on its quality.
Coffee is a highly valued cash crop that is consumed as a major beverage around the world. Coffee trades attract massive volumes, which is only slightly lower than the trade volume of crude oil.
Wheat is important in several industrial production processes. A lot of the by-products of wheat are consumed daily as cereal and bread. This makes it a primary food source.
The top traded commodities on the global stock market benefit several industries. They also contribute significantly to the fortune of individuals and the economy of countries. Much more than these, top-rated commodities enhance the standard of living.