Agricultural Commodities

There are various types of agricultural commodities such as; milk, meat, grains, and fruits and various applications for each of them. Many underpin the economies of both developed and developing countries and revenues from exports of agricultural commodities such as rice or soy beans are a major source of revenue for the governments of those countries. As well as providing a living for millions of families who depend on farming and growing these commodities.

Agricultural Commodities - What are they?

For many of the leading export countries these agricultural commodities can be the main drivers of their economies; however agricultural commodity prices can be very unstable and during times of instability the effects can be very far reaching.

During times where demand has decreased yet production levels have remain the same this can be harmful for the exporting nation. This in turn impacts on the farming industry who have to act to stabilise prices which means cutting production which then leads to higher unemployment levels with in the industry. But there are always two sides to a coin, like when demand for agricultural commodities increases so much that there is not enough of the product to meet demand.

For example, in some places, corn is a key component in the manufacture of ethanol, which is increasingly being used as a bio-fuel in cars and trucks, where businesses and industries are trying to cut down their use of fossil fuels and become more greener.

However this agricultural commodity's main use is as a feed for livestock.  But when energy prices are higher demand for corn-based ethanol tends to rise.

The increase in demand for corn can cause other problems, such as the increasing use of corn-based ethanol for bio-fuels this puts extra stress to manage the demands of livestock and energy. There is not enough farmland around to plant enough corn that would satisfy the needs of the world to feed livestock and power vehicles. So as the price of corn rises, it becomes more difficult for livestock farmers to feed their animals.


Corn used for corn based ethanol - bio fuel

With all these challenges, even the developing nations are investing in new technologies, methods and infrastructure in the agricultural industry. As advances in technologies like water purification take off, the prospects for a continent like Africa to become a major player in agricultural commodities production begin to open up.

Away from production and import/export, agricultural commodities are traded on all the major stock exchanges around the world. Agricultural commodities trading specialists trade billions of financial contracts every year around the world. The primary value of these contracts is tied to agricultural commodities such as avocados and soy beans to tomatoes and oranges.

This global trading reinforces the agricultural commodities business, and offers a way for farmers to lock in constant prices for items on future dates. Without this option, farmers would be at risk of losing crops to vulnerabilities such as the harsh weather or disease.

Trade in Agricultural Commodities with London Commodity Markets

London Commodity Markets is a global leader in agricultural commodity trading with a long pedigree in this sector as well as exclusive access to the latest projects.

Some of these projects are already producing exceptional returns on investment at significantly lower exposure than other options currently available. Investments in agricultural commodities have enjoyed a revival in recent years due to rising demand for food, feed and fuel, coupled with pessimism in traditional investments.

The agricultural investments sector offers potential investors an index of possibilities for investing. These range from standard trading of benchmark futures and options products covering all major agricultural commodities, to investments in agriculture in the form of large scale acquisitions of farmland from lower to middle income economies, or through collaborative arrangements between large investors and smaller farmers.

As price and production volatility of agricultural commodities increase the variability of revenue, investors realise the importance of risk management as a component of their portfolio management strategies.
At London Commodity Markets, we are committed to providing expert advice on agricultural commodities to all our clients in an objective, transparent and accessible way.

Invest in Agricultural Commodities

To find out more visit us at  London Commodity Markets