Langbahn Team – Weltmeisterschaft

Talk:Commodity market

Comment

This article has little practical relevance regarding current markets, exchanges, or an explanation or at least a reference to the CFTC, Futures, options, derivatives, financials, foreign exchanges, or any real discussion of Commodity Markets.

The discussion are presented as facts, but are nothing more than philosophies. Not even whole philosophies, but fragments that are poorly constructed and not properly referenced, are contained in this article.

Philosophically, the postulates have not yet formed into proper theories. As for commodity markets, the research is also incomplete and sloppily presented.

The economic impact of the development of commodity markets is hard to over-estimate. Through the 19th century "the exchanges became effective spokesmen for, and innovators of, improvements in transportation, warehousing, and financing, which paved the way to expanded interstate and international trade." - Jerry Hodges

Every time any of us add to a site we could quote ourselves. Where would it end? The use of this name appears inconsistent with other pages connected to this subject. GT

Whew. OK, no doubt you clowns who learned about commodity markets from a web site or high school business class will want to cut this to ribbons. But this time it's got plenty of meat. Some people won't like the way that US commodity trading is not the focus of the article, and UN proposals for new ways to use commodity methods to create fair trade is more prominent, but add up the numbers, folks - any UN proposal constitutes a more neutral view than any US centric snapshot of what's up now.

Not that that ever stopped you. Would appreciate a heads-up here first, or advice on how this might split into multiple articles. The history of the commodity markets and the use of commodity approaches to deal with negative goods (harms) might be two separate articles, even though the function of such markets is the same, e.g. emissions markets, etc. - but it's hard to keep such stuff separate from the "ecological production" arguments that air, water, etc., are natural commodities, so I just put it all here for now - 24

The most recent edit is an improvement overall - puts the key definition points up front, omits nothing currently important, and puts history in the middle just in time to explain delivery and other guarantees.

However, the role of the state in these guarantees can't be avoided, nor the way that empires rose directly out of their trusted role protecting trade routes, and handling the "defense, infrastructure, justice" of them. The differences between the Chinese (strict fiat) and Roman (silver coinage that became slowly debased) ways of creating money were extremely important in their later history. The Chinese Empire survived in one way or another until 1911, whereas the Romans lost the trust of Europe as administrators of the coinage - perhaps due to the more intense political competition, perhaps due to the fact they represtned their money as a commodity (silver) and cheated... all of that could go in commodity money.

But, the role of the state in the classical commodity markets is hard to avoid, as it illustrates the whole history Adam Smith wrote about in 1776. I suppose this material could be an intro in political economy since it's strictly about the relationship of capital factors.

It just isn't sensible to talk about these guarantees outside the concept of military fiat which how they were historically provided. One could say that as the probability of delivery depended more and more on the state, it became fiat money, and as it depended more and more on inter-participant trust, it became credit money, and if it depended on supply of some core standard commodity like gold, it became commodity money, and if it was anything else, it was a plain and simply a good old commodity market contract.

In other words, the commodity markets are the central organizing means by which civilization grew up, in a great many theories, and so if this article lacks a reasonable treatment of the states' role, of credits' role, of the role of the traders in, and growers of, many early commodities, it fails in that central purpose.

Basically, you should be able to come here as an anarchist and realize while reading this that everything you used to do so (the computer, the Internet Protocol compliant software, the house you live in, the eletricity that runs everything, the orange juice you're drinking) is delivered in a uniform way in part due to the operations of commodity markets. You should understand what role fiat and credit play in commodity definition, standardization, and the reliability of delivery. And you should understand that to some degree your CO2 exhalations, water supply, waged labor time in McJob, and free time are all commodities, since conceivably they all provide some uniform benefit or pain to someone (in the case of free time, to you).

If the article can't do that, it will become full of various pro-market and anti-market polemics, and suspicious cross-talk about whether the state can ever be sincerely committed to truly enforcing negative commodity markets... e.g. bounty hunting which is "a price on your head", which I didn't mention in "value of life" since the idea of assassination markets angers some people.

Anyway, I don't object to the article's current form, and maybe I did a poor job conveying the context above, but I'd like to know, if it's not this article and it's not money, where can this symbiosis between humanity's governance and its commodity flow be thoroughly explained? In evolution of societies we concentrated on the far more conventional non-economic theories and barely mentioned the whole track of belief in dialectical materialism (Marx) and commodification driving all concepts of civilization (anarchists).

Obviously, the view the commodity markets are a consequence of, and not a driver of, civilization, should be respected, strange and silly as I think it is, but this article now goes too far in assuming "the state" somehow in the background magically making delivery happen and market players honest.

In the age of Enron and Andersen etc., you'd think people would know better.24

Your facts are wrong. The Chinese didn't use fiat money for most of its history. During the Qing dynasty, there was a bizarre system of bronze and copper along side a system using silver (mostly Mexican dollars).

ok, but I assume the Mexican dollars were a relatively late development ;-) That system sounds well worth a line or two of its own - got a link for it?
also, I don't mean to imply that the fiat money was always and exclusively used, but that the empire established (very early) the right to replace all commodity money with fiat money - as did the Union during the American Civil War. The Roman Empire never had nor claimed such authority, and thus when it debased the money, it lost credibility and appeared weak. 24

Structure

I've tried to create the beginnings of some structure, as a starting point for factoring the article. It's trying to do much (if it's trying to be a book, there are other Wiki projects for that!), and some of it should be split into daughter articles. Looks like it should end up with

whilst this article focusses on how commodity markets work, with short sections to summarise relevant daughter articles (in the Main article: ... or See also.. way). Rd232 00:19, 13 Jan 2005 (UTC)

Error

Futures markets

Compared to Adam Smith’s relationships of capital factors, futures trading, seems trivial and insubstantial. Not long ago, we actually called commodity futures trading, trading commodities. Moreover, back then in some small way you could argue that even currencies were commodities. However, once we started trading totally illusionary (no physical manifestation), subjectively managed indexes like the S&P 500. We could no longer call them commodities. So, modern futures trading needs to be somehow distinguished from commodities trading even thou at one time they may have been same thing.

Merging these topics might be possible, what we are looking at is on the one hand physical commodities, which have been traded everywhere, at all times whenever two or more parties agreed. On the other hand futures contracts, based on those commodities and other unreal products, which are traded on organized exchanges should rightfully be called futures instead.

So, what we have is, physical commodities are real commodities. Contracts traded on these and other, man made securities, for future delivery on organized exchanges are called futures contracts. We have to decide if these should be merged or kept separate. Trading on physicals is probably based on supply and demand for products, whereas trading in futures markets is more likely based on price action for contracts. Personally I think futures contracts should be merged with a comprehensive article on futures markets or futures exchanges and only mentioned briefly in commodity markets. GT

Removed sections

Modern commodity markets

I removed this whole section. It seems to bring in a bunch of different unrelated issues, whilst being vague on all of them - Crosbiesmith

Despite the shift to fiat money, and credit money, direct commodity trade and barter has always remained active in the background in some form or another, and seems to have been revived due to global capitalism, wherein nearly every currency is widely traded as a commodity.

Traditionally, "money-changing" or "banking" was one of the prime functions of commodity markets. The key difference between the ancient and modern commodity markets is the degree to which banking and clearing has been separated and regulated by consent of many governments which have surrendered some national sovereignty to enable the Bank for International Settlements, for instance, to back currencies in global trade, establish common risk and reserve standards, and, in the words of its chairman Andrew Crockett, "hardwire the credit culture". With credit concerns minimized or at least standardized, the commodity markets can then trade equity in enterprises as a "stock market", national currencies in a "money market", and everything else in a "commodity market" of its own.

Commodity and empire

Also removed this. I think the relevance of central banking, cheese, and the Knights Templar is not sufficiently explained.

Europe did not establish a central banking system until the Knights Templar in the 13th century. A series of commodity markets prevailed in medieval Europe throughout that time, as wheat and cheese and iron and wood were traded in more local markets. The gold standard acquired its pre-eminence to back trade, as it did not depend on the constantly-shifting medieval feudal alliances.

Huh?

I came to this page to find out what commodity markets are. Even after following many of the links, I still have absolutely no idea whatsoever. Could someone who knows about the subject please insert some meaningful, jargon-free explanations for an ordinary person? Xezlec (talk) 03:36, 10 February 2008 (UTC)[reply]

Weasel Words

"Some Argue" appears TWICE in this article. Stop trying to dodge NPOV! --169.244.139.8 (talk) 16:19, 30 April 2008 (UTC)[reply]

This section is totally loaded with Anglo-American POV. Trying to find reasons for a commodity boom is not a NPOV encyclopedia approach. "The 2008 global boom in commodity prices - for everything from coal to corn – was fueled by heated demand from the likes of China and India, plus unbridled speculation in forward markets."

If the editor really wants to put that viewpoint please cite it to someone like George W Bush who said the same thing, rather than putting it as a widely acceptable truth. Plus what does the phrase "everything from coal to corn" really mean?

I don't wanna argue economics here, because I clearly disagree with the above stuff in that section, but then it would be my viewpoint, and the wikipedia must be Neutral POV. Recent trends occurred where there was a bubble in commodity prices(a verifiable logical fact), but they were caused by surge in Asian demand is unverifiable illogical fact, because it could have equally occurred because of a surge in money supply of US Dollar(the choice of currency in the International market).

Similarly "unbridled speculation caused bubble" is another loaded phrase, suffering from the logical fallacy of confusing causation and effect(like blaming Rap Music for crime and violence). Again that point can be explained with the dollar bubble. --68.197.93.248 (talk) 22:23, 4 May 2009 (UTC)[reply]

Doesn't seem very controversial that there has been a huge increase in demand for several commodities from China (and, to a lesser extent, India). Increased demand provides upward pressure on prices (unless you reject one of the most basic tenets of economics). But on the detail, some the comment above is correct - the text needs to be replaced by hard facts with references. Oh, speculation definitely does cause bubbles. In fact it's the only thing that can do so. Whether Rap music causes crime seems a bit off topic... 86.24.87.222 (talk) 00:46, 17 October 2011 (UTC)[reply]


--Globally, prices also increased in part because of a shift in production from crops like cotton to crops like corn, soybeans, and sugar cane which aresuitable for use in creating ethanol and other biofuels. Someone else might be able to expand on this? —Preceding unsigned comment added by 71.193.124.36 (talk) 06:20, 9 February 2010 (UTC)[reply]

Commodities derivatives cause starvation

http://stopgamblingonhunger.com/

The commodity markets and the geographical locis - The questions and issues pertaining to the commodity markets and or the stock markets are essentially held for the variations in the seasonal cropping in the calendar year in the geographical locis

The commodity markets - Research and Development for the systems and the organization Wednesday, 06th April 2011

The preamble to the commodity markets -

The commodity markets and the stock markets are both terms applied in the diverse nations trading in the stock markets / public listed companies in shares or brokers in the transactions through auctions and agreed terms for trade and in the commodity markets essentially defined for the seasonal output in the agricultural sector. The seasonal output are both in the seasonal cropping systems in the calendar year in the perennial cropping systems in the calendar year.


The current questions and issues in the commodity markets -

The supply chain solutions adopted in the australian systems and the links to the production systems for the calendar year and the links for the commodity markets in the calendar year in the geographical locis.

The supply chain solutions adopted in the australian systems and the links to the 'Enterprise Resource Planning' as per the transactions in the trade in the financial year in each of the production systems linked through the supply chain solutions in the specific geographical locis

The capital requirements for the seasonal cropping systems and the diverse terms for the transactions in the capital markets for the range of purchases including the purchase of assets as per agreed schedules for the repayments.

The capital requirements through the capital markets for the operations per season for each of the type of cropping system and the schedules for the repayments as per the earning per season.

The capital requirements through the capital markets for the maintenance of the on farm ventures in the seasonal cropping practices and the schedules for the repayments.

The considerations for the types of borrowing/s and the corresponding repayment/s as expenses as per the varied seasonal cropping systems in the accounting systems to be adopted for the financial year.

To be continued -----> — Preceding unsigned comment added by Kala Maheswaran (talk • contribs) 01:51, 6 April 2011 (UTC)[reply]

History without dates??

The entire history section of this article has not a single date beyond a vague reference to "the 19th century", as well as a lack of references. Clearly it has been written off the top of the heads of people who only had a vague idea of the facts, and probably had forgotten where they got those vague ideas.

Has anyone out there got a decent source for putting in some dates, places, facts and referencing these properly? 86.24.87.222 (talk) 00:38, 17 October 2011 (UTC)[reply]


Criticism?

The first I heard of commodity trading was in reference to rising food prices, that speculation on the commodities market was creating a bubble that will make food unaffordable for many, until the bubble bursts and puts farmers out of business, causing a shortage of supply of food and making more people going hungry. Is there any truth to this, and if so, shouldn't there be a dedicated criticism section? 130.159.234.62 (talk) 09:50, 22 July 2013 (UTC)[reply]

Copyedit

Copyedited this. Feedback encouraged. Comments:

  • This is still a mess. It is very poorly organized (although better now) and full of repetition.
  • There is no need for once-recent market updates. They're now out-of-date and even if updated, would soon be again. Add a link to a pricing database if you like.
Cheers. Lfstevens (talk) 22:55, 26 September 2013 (UTC)[reply]

Exchange Traded Commodities are not Commodities Exchange Traded Funds

An Exchange Traded Commodity or ETC has nothing to do with a Commodity ETF beyond the fact that they both belong to the Exchange Traded Product family of securities. The ETC is put on the market by an SPV which is not a fund, this frees it from the requirements funds have, so it can both effect direct investments and its' investments concentrated. Can you please explain why the article suggest they are the same? 93.36.53.115 (talk) 18:33, 6 June 2015 (UTC)[reply]

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CFDs???

OK, you CAN trade CFDs on commodities, but this segment seems like it was written by a cfds broker. a little more depth or kill it? — Preceding unsigned comment added by 89.191.212.116 (talk) 10:07, 25 December 2019 (UTC)[reply]

General Review

The article should be reviewed completely and reorganized. The most striking aspect in my opinion is that it fails to separate physical trading and paper trading. This greatly affects the readability and intelligibility... I would thus advocate the present article to be split into one focusing on commodity future markets (or commodity derivatives in general) and one focusing on physical commodity trading. I note that those two "worlds" are deeply connected yet they differ on many fundamental issues (to name one, you don't need to store/transport/secure thousands of metric tons of physical corn if you trade futures, at least if you offset before expiry). I may take the time in the future to look more in depth into this article. Meanwhile, if editors familiar to the subject could kindly raise the major issues or debate on my proposition, that would be nice! FOBSCIF (talk) 18:12, 23 December 2020 (UTC)[reply]

RE: Disputed inline = "Futures are secured by physical assets." This is not the case to my knowledge, and it is rather the contrary. The future's underlying is a standardized commodity but is no way secured by a physical collateral. + the provided source do not make this claim. Would recommend to simply delete this line. — Preceding unsigned comment added by FOBSCIF (talk • contribs) 18:31, 23 December 2020 (UTC)[reply]

In general, this article is very technical, but completely lacks any discussion of the ethical and environmental aspects of commodity trading. --TadejM my talk 13:02, 7 July 2021 (UTC)[reply]

Standardization and other unclear sections

As has been noted before, the article is both technical and incomplete. It is in need of attention by an expert.

Other sections suffer from similar issues, but "standardization" is particularly bad. It lacks a definition and simply dives into a detailed example of what constitutes "standard grade" and "deliverable grade" soybeans. If this grading reflects the "standardization", should the heading be called "grading" or "trading grades"? If not, why?

In its last paragraph, it also adds that there's "technological standardization", which seems to rely on "messages to be sent, received and processed in the same format as stocks or equities"; but it is unclear why standardizing messages would be equivalent or relevant to standardization of traded goods as in the example.

MiG-25 (talk) 01:44, 15 March 2022 (UTC)[reply]

Quelle: https://en.wikipedia.org/wiki/Talk:Commodity_markets