Example of a trade transaction in the commodities market
Prices for commodities, especially for cereals, are quite vulnerable to unfavorable weather events, such as droughts, floods and frosts, as well as seasonal factors. A fresh example of the direct dependence of prices on one of the most popular agricultural commodities on climatic conditions can be the situation with cocoa beans, the value of which has increased by 25.3% since the beginning of this year. According to the London Mercantile Exchange, the price of a ton of cocoa beans on April 4, 2018 was £ 1733, whereas on January 2, 2018 it cost £ 1383. This leap in global prices for cocoa was caused by a sharp deterioration in the forecasts for the future harvest of this one of the key raw materials for the confectionery industry in the main countries of its production - in Ghana and Cote d'Ivoire. During the first 3 months of this year, you could earn $ 5,600, having invested initially $ 18,700. Having bought one futures contract (10 metric tons) for cocoa beans at $ 1870 / t on January 2, 2018 and having sold it in 3 months on April 4, 2018 at a price of $ 2430 / t, you could earn 560 points of profit, which equals $ 5,600.