Factors which can influence supply
and/or demand of commodities include:
Floods, drought, plant disease..
Wars & strikes
Changes in Government policy & regulations
Cartel agreements
Changes in consumer tastes
Availability of new substitutes
Activities of speculators
ITC M4:U8:8.1-2
, Purchasing commodities…
PRICE is the main uncertainty! • Commodity exchanges give
reference prices, but involve
more “paper trading” than
MAIN OPTIONS FOR BUYERS: physical delivery…
• You will normally buy from a
trader/dealer or producer
1• Spot purchasing
2• Speculating: will prices go up
or down?
3• Hedging by Buying forward
4• Hedging in more complex situations
5• Call options
ITC M4:U8:8.2-1
and/or demand of commodities include:
Floods, drought, plant disease..
Wars & strikes
Changes in Government policy & regulations
Cartel agreements
Changes in consumer tastes
Availability of new substitutes
Activities of speculators
ITC M4:U8:8.1-2
, Purchasing commodities…
PRICE is the main uncertainty! • Commodity exchanges give
reference prices, but involve
more “paper trading” than
MAIN OPTIONS FOR BUYERS: physical delivery…
• You will normally buy from a
trader/dealer or producer
1• Spot purchasing
2• Speculating: will prices go up
or down?
3• Hedging by Buying forward
4• Hedging in more complex situations
5• Call options
ITC M4:U8:8.2-1
