Economy & context
Commodities are standardised raw materials such as energy, metals and agricultural goods. Investment exposure often uses futures, so returns need not match a spot-price chart.
Make it click
Today's market price for grain and a contract for delivery months later respond to storage, financing, season and expected supply. They are related but not identical items.
Now put that into markets
Commodity markets connect producers, users, merchants and financial participants. Futures curves and rolling shape many investable products.
Supply can be slow or seasonal, while demand changes with growth and substitution. Carry, convenience yield and inventory influence curve shape.
Identify commodity grade, location, currency, contract and roll method. Separate spot movement from collateral and roll return.
Commodity prices can be volatile and leveraged products can diverge from intuitive long-term spot exposure. Physical ownership adds storage and delivery risk.
Takeaway
