Commodities

Most commodity futures tracked by Trading Economics have gained in value over the last 12 months. The biggest gains were recorded for coffee, 116% increase over the last year, silver - 102%, cotton - 86%, corn - 78%, wheat - 58%. Heating oil, Brent crude oil, Light crude oil, ethanol, gasoline, gold, copper, soybeans and sugar recorded gains between 20% and 50%. Many factors help to drive up the value of those commodities. For example, price of oil related products was influenced by unrest in Middle East and Africa. Food cost was driven not only by series of natural disasters and higher transportation cost but also by drive to produce biofuels as a source of renewable energy in development countries.

Commodity futures are standardized contracts for the purchase and sale of physical commodities for future delivery on a regulated commodity futures exchange. The commodity futures contract price is determined by the equilibrium between supply and demand among competing buy and sell orders on the exchange at the time of the purchase or sale of the contract. Unlike options, a futures contract gives the holder the obligation to make or take delivery under the terms of the contract. An option grants the buyer the right, but not the obligation, to establish a position previously held by the seller of the option.