Commodities present good diversification for traders, since commodity prices are built around the moving and delivering of physical assets. 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.
Hence, traders need to be aware of Commodity fundamentals. These fundamentals will prevail over the longer term, because world growth remains the main driver of commodity prices: in short, people will continue to want, and need, energy and food.