Commodities markets are markets where certain every day goods and items are traded. The goods are bought, sold and exchanged in regulated amounts by traders acting on behalf of themselves or carrying out the instructions of others.
The commodities market has its origins in agriculture, in early times it was cattle, sheep, pigs, wheat and corn that was traded between vendors. Going right back to ancient times, people have looked for a way of standardizing trade contracts and this remains the case today. Research shows that as far back as 4000 BC to the ancient Sumer civilization, small clay tokens with the image of a pig or a sheep were baked in kilns and traded. With a number written around the edge of the coin this was the first evidence of a crude ’I.O.U’ system in operation.
Through the ages the markets have reflected the times with spices, gold, wood, cloth and corn being represented on the markets. During the mid 19th Century, the markets changed to reflect the most sought after items in a more industrialized world. Trading began in precious goods and metals. It was John D. Rockefeller and Standard Oil that began selling certificates against the oil they were producing. In 1882, the National Petroleum Exchange was opened, officially making oil a traded commodity.
These days the trading of oil on commodities markets is seen as much as an indicator to political stability as a guide to the supply and demand of fuel. Oil prices are often used as an indicator to unrest in the Persian Gulf for example. The oil market is an exception. Most markets are not so tied to the politics of volatile regions; even natural gas tends to be more stable, as it is not traded across oceans by tanker as extensively and therefore is not as vulnerable.
The commodities market has its origins in agriculture, in early times it was cattle, sheep, pigs, wheat and corn that was traded between vendors. Going right back to ancient times, people have looked for a way of standardizing trade contracts and this remains the case today. Research shows that as far back as 4000 BC to the ancient Sumer civilization, small clay tokens with the image of a pig or a sheep were baked in kilns and traded. With a number written around the edge of the coin this was the first evidence of a crude ’I.O.U’ system in operation.
Through the ages the markets have reflected the times with spices, gold, wood, cloth and corn being represented on the markets. During the mid 19th Century, the markets changed to reflect the most sought after items in a more industrialized world. Trading began in precious goods and metals. It was John D. Rockefeller and Standard Oil that began selling certificates against the oil they were producing. In 1882, the National Petroleum Exchange was opened, officially making oil a traded commodity.
These days the trading of oil on commodities markets is seen as much as an indicator to political stability as a guide to the supply and demand of fuel. Oil prices are often used as an indicator to unrest in the Persian Gulf for example. The oil market is an exception. Most markets are not so tied to the politics of volatile regions; even natural gas tends to be more stable, as it is not traded across oceans by tanker as extensively and therefore is not as vulnerable.
