Commodity Trading

Cairo, Egypt David Rosenberg – The five countries hit hardest by turmoil of the Arab Spring will show a combined drop in economic output of about 2.3 percent this year as they struggle with unrest and its after effects, according to figures based on a forecast by the Institute for International Finance (IIF).

Egypt’s $218 billion economy will be responsible for most of the decline, with output dropping 2.5 percent this year after inflation. The smaller economies of Syria and Yemen will experience sharper contractions, with Syrian gross domestic product slumping by 3 percent and Yemen’s by 4 percent. Tunisian GDP will decline 1.5 percent. Only Bahrain will show any positive growth this year, with GDP expanding 2.9 percent, the IIF forecast. But that will be the slowest pace of growth for the island state since the 1990s, the IIF report released late Tuesday noted.

Moreover, with the Middle East still suffering political instability, the chances are good that economic pain will be more severe than now predicted, said George Abed, director of the Washington-based IIF’s Middle East department.

“The oil-importers face considerable downside risks to growth,” Abed said in a statement. “Not only is the political reform process unlikely to be smooth and could drag on beyond 2011, further delaying investment decisions and slowing any economic recovery, but investigations into political corruption are adding to business uncertainties.”

The five countries are facing different challenges. In Tunisia and Egypt, long-time leaders have been replaced by transitional governments committed to bringing democracy and stabilizing their economies. Syria and Yemen are gripped by violence as their leaders have sought to quell opposition protests. In Bahrain, the government, helped by Saudi troops, has restored quiet but at the cost of deterring business.

All five, however, face a similar dilemma of assuaging popular demands for improved living standards at a time when their resources are constrained by slowing economies, accelerating inflation and double-digit unemployment. Governments have risked exacerbating the problem by offering short-term solutions, such as increased subsidies for food and other necessities, raising salaries and creating make-work programs.

The IIF estimated that consumer prices across the Arab world will climb 5.7 percent this year, but among the economies hardest hit by unrest, prices will rise much more sharply. In Egypt, inflation may reach 11.5 percent, in Yemen 15 percent and Syria 8 percent.

“In this very difficult environment, and amid major pressures to institute far-reaching political reforms, it is absolutely critical that the transition authorities in Egypt and Tunisia place a high priority on structural economic reform,” Abed said.

The outlook for the five countries improves in 2012, with growth reaching 3.8 percent, according to figures based on IIF estimates. Tunisia’s $44 billion economy will lead the recovery, posting a 5.2 percent increase in GDP. Egypt and Bahrain will both expand by 4.2 percent. Syria and Yemen will show more modest turnarounds, growing 2 percent and 3 percent, respectively.

Nevertheless, the IIF warned that the kind of structural reforms that will bring sustainable growth will require “fundamental political and economic reforms and will take time.” It expressed concern that transitional governments, focusing on political and constitutional issues, will ignore economic reforms.

Global financial institutions may serve as a lever for reform as countries like Egypt and Tunisia seek support to tide them over the difficult period, the IIF said.

The International Monetary Fund (IMF) head said earlier this month the fund would likely make available $35 billion in loans to Middle East countries where popular uprisings have occurred. Although no country has formally approached it, Egypt has indicated it needs up to $12 billion to meet a funding gap, Masood Ahmed, the IMF’s director for Middle East and Central Asia, told Reuters April 27.

The IIF said Egypt’s sagging economy was at risk for a “second wave of social upheaval” because the public has high expectations about the future after President Husni Mubarak was forced to step down in February in the face of massive protests. Political reform could run into 2011 while arrest and investigations of Mubarak-era businesspeople may discourage investors, it said.

In contrast to the economies of turmoil-ridden countries, most of the Middle East’s oil-exporting countries are likely to see significant growth this year, including Iraq, which grew by just 0.9 percent in 2010 but is now likely to grow by 11 percent in 2011 and by 11.5 percent next year.

With regard to Dubai, the IIF said Dubai World has successfully restructured its debt, but worries persist about the country’s debt overhang. Other Government Related Entities (GREs) are also undergoing debt restructuring, including Dubai Holding. Dubai has regained market access, but the cost of borrowing remains high, reflecting the rollover needs of the total of $31 billion falling due in 2011 and 2012, and the continuing challenges related to the depressed property sector.

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Dubai, United Arab Emirates (TML) – Just as there were signs that Dubai might be climbing out of its debt hole, Credit Suisse has released a report that puts the size of the emirate’s borrowings above conventional estimates.

Entities 50% or more owned by Dubai’s government and ruler Sheikh Mohammed Bin Rashid Al-Maktoum amount to $129.3 billion, the Swiss bank said in a report dated January 13. It said the debt burden could, in fact, be “much higher than our final numbers owing to the lack of full disclosure.”

The debt of what is popularly known as Dubai Inc, a collection of government and quasi-government businesses and agencies, is usually put at about $110 billion.

A restructuring of the debt of Dubai World, the biggest of the Dubai Inc. borrowers, last September brought some improvement in investor sentiment and a handful of bond offerings at the end of last year. But Credit Suisse said it sees new problems ahead in 2011.

“While Dubai World has secured a debt restructuring agreement with its creditors, we think that the issues may not quite be over for the emirate,” Credit Suisse said. “We think that there is a chance of a further rescheduling of debt.”

Over this year and next, Dubai Inc. has to make repayments of $17.5 billion and $17 billion, the bank estimated. The level falls to $9.7 billon in 2013, but it balloons to $26 billion in 2014, when some $20 billion of rescue-financing from Dubai’s fellow emirate Abu Dhabi comes due, Credit Suisse forecasted. It termed the repayment timetable “substantially tight.”

Credit Suisse estimated that Dubai World, the government conglomerate that precipitated the debt crisis when it asked to reschedule loans in November 2009, accounts for almost 40% of Dubai Inc.’s total debt, or $50.2 billion. Direct government debt accounts for another $28.6 billion, with the balance held by the state-owned Investment Corp. of Dubai and other government-related entities, the bank said.

Credit Suisse hasn’t been alone is expressing concern about Dubai Inc.’s ability to meet its repayments this year. A Bank of America Merrill Lynch report December 6 warned that Dubai Inc. faces large redemptions this year, particularly in the first and third quarter. It also warned of “spillovers” to Abu Dhabi because of the two emirates’ business ties and Abu Dhabi’s role as Dubai’s lender of last resort.

“We expect the restructuring to follow the Dubai World model, with modest haircuts on

loans through maturity extensions of five to eight years,” the report said. “Though it remains to be seen, bond holders are likely to be paid in full to keep market access open.”

Dubai’s bond market went into a deep freeze following the Dubai World debt standstill. But it began thawing in the final months of 2010 after the conglomerate reached an agreement with creditors.

Dubai issued $1.25 billion in global bonds in September. The next month Emaar Properties placed successfully up to $500 million in convertible notes due in 2015, increasing the size of the issue from $375 million due to strong investor demand. Moreover, Dubai Electric and Water Authority (DEWA) saw demand for a $2 billion offering oversubscribed by more than six-fold the next month.

“We’d seen an improvement recently,” Tommy Trask, a Dubai-based credit analyst at Standard & Poor’s, told The Media Line. “At the end of last year a number of companies including DEWA and the government of Dubai were successfully tapping capital markets. We reacted to that by raising the ratings on many of these issues.”

On Friday, CityCenter Holdings, the Las Vegas casino part-owned by Dubai World, said it sold $1.5 billion of senior secured notes in a bid to restructure a portion of its debt.

But analysts said the sentiment had lately showed signs of sagging.

Arabtec Holding said last week it planned a five-year, $150 million convertible bond offering and a rights issue of $108.5 million. The financing reflects the company’s need to raise cash in the absence of bank or other finance than an opportunity to meet investor appetite, analysts said.

Trask declined to forecast the outlook for Dubai’s debt market this year. But, he noted, even with the huge debt overhang, some parts of Dubai’s economy are recovering. Citigroup Global Markets estimates real economic growth for Dubai will accelerate to 6% this year from 1.7% in 2010 (it shrank 3% in 2009, Citi estimates).

“You have different industries that have different challenges,” Trask said. “Some industries will be able to tap the capital market because fundamentals are stronger and others will have a more difficult time. For instance, real estate and construction will likely have challenging market conditions.”

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Cornelius, NC, United States (AHN Sports) – Michael Waltrip Racing owners Michael Waltrip and Rob Kauffman started 22nd in class and 27th overall in thes Dubai 24 Hour sports car race at Dubai Autodrome.

More than 80 cars from 30 countries made qualifying efforts and Waltrip and Kauffman, along with co-drivers Rui Aguas and Matt Griffin, are piloting the Ferrari F430 GT2 of the AF Corse team.

“We had to get through qualifying today without our power steering,” said Waltrip. “This Ferrari is a little bit different than a Cup car. When the power steering goes out in a Cup car you can kind of manhandle it. In this car it’s really a handful. They’ll get the power steering sorted out and we’ll be good to go for the race.”

The difference for the NASCAR Sprint Cup Series team owner is to remember that this race is about the long haul and not a sprint to the finish.

The main concept of racing, however, still applies and that is being there at the end.

“In a 24-hour race the qualifying position is a little less important, but you have to be there at the end,” Kauffman said. “So that’s our strategy. The car is fast the crew is fast so I think we have a real chance.”

Waltrip and Kauffman competed in Dubai last year and in Belgium where they finished third on the legendary Spa Francorchamps circuit.

MWR executive Calvin Wells III said the team’s participation in international racing events is part of its worldwide business strategy. Last year, MWR visited the Goodwood Festival of Speed in England, Toyota Motorsports Festival in Japan and also went to races and tests in Dubai, Belgium and Portugal.

“It’s important for MWR to have our owners promote our company on a global stage. Michael is the two-time Daytona 500 champion, and Rob is an accomplished sports car racer in his own right,” said Wells, MWR’s vice president and chief operating officer. “Everything we’ve done internationally in the last year, from Goodwood to racing in Belgium and Dubai, is about raising the awareness of Michael Waltrip Racing on the international level.

“The world is changing and our sport is changing. We are seeking fans and sponsors globally. We believe there is a lot of interest in NASCAR around the world, and we believe taking our owners to those audiences will soon pay dividends.”

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Abu Dhabi, United Arab Emirates David Rosenberg – Economic growth is returning to the Middle East, but not quite at the pace of the go-go years of soaring oil prices and massive real estate development.

An International Monetary Fund report released Sunday estimated the combined economies of the region stretching from Morocco to Pakistan would expand by 4.2 percent this year, almost double the pace of 2009. They will grow even faster in 2011, with the region clocking an expansion of 4.8 percent.

“We expect most countries in the region to grow faster in 2010 and 2011 than in 2009,” Masood Ahmed, director of the IMF’s Middle East and Central Asia Department, said in a press release.

Although the global financial crisis took down the region’s highest flying economies, most of the Middle East weathered the worst economic contraction well. The world economies shrank 0.6 percent in 2009 as the impact of bad home loans in the U.S. reverberated through the world’s financial markets. In the Middle East, economies continued to expand, albeit at a pokier 2.3 percent pace.

The Middle East’s oil exporters will likely see economic growth pick up to 3.8 percent from 1.1 percent in 2009 as oil prices climb to an average of $76 a barrel, according to the Washington, DC-based IMF. In 2011, the rate of growth will probably accelerate to 5 percent as oil prices average $79 a barrel. Still, that leaves the oil economies growing at a slower pace than in the pre-recession years.

Oil exporters remain too vulnerable to fluctuations in the global price of petroleum, which traded at $82.10 on Friday. While not all Middle East’s big oil exporters are that heavily dependent on oil for economic output, they all rely on oil revenue for half or more of their government budgets.

For the Middle East’s oil importers, the pick-up in growth will be less dramatic. GDP growth will reach 5 percent this year, a 0.4 percentage point improvement over 2009, before slowing to 4.4 percent in 2010, the IMF report said. Egyptian GDP growth will show steady improvement this year and next, although well below the pre-recession rates when growth exceeded 6.5 percent annually. Pakistan, reeling from the impact of floods last summer, will see economic growth slow considerably from previous forecasts.

The IMF report warned that as strong as the recovery has been for the region, it is still not enough to provide jobs for the Middle East’s large and growing population of young people. It estimated that half the population is under age 25 while the average jobless rate in 2008 was 11 percent. For the region to create enough jobs, its combined economy would have to grow 6.5 percent annually over a sustained period, something it has never managed to do.

“There is now a recovery happening in the emerging markets in the region,” Ahmed said at a forum in Dubai. “But they are not growing fast enough to create the jobs they need.”

The Middle East needs 18.5 million jobs over the next decade, about 7 million more than it will create if it keeps to its previous rate of growth, the IMF said, admitting this was a “tall order.”

For all its oil wealth, the Middle East lags behind the world’s emerging economies. Since 1990, GDP has increased 55 percent for the Middle East, North Africa and Pakistan, but the emerging Asian economic powers have boosted their output by 200 percent in the same period, the IMF said. The region’s governments can accelerate economic growth by paring back on government regulation and privatizing state-owned enterprises and liberalizing labor markets. The Middle East also needs to redirect more of its trade from the slower-growth economies of Europe to burgeoning Asia, it said.

Inflation is also rearing up in some Middle East countries, the IMF warned. In Saudi Arabia it accelerated from 3.5 percent in October 2009 to 6.1 percent last August. In Iran, consumer prices were moderating until recently – showing from a 30 percent rise at the end of 2008 to 7 percent a year ago. But they have since begun rising to a 10 percent annual rate in the first quarter of 2010, the IMF report said.

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Riyadh, Saudi Arabia (TML) – Possessing a fifth of the world’s proven oil reserves, Saudi Arabia has long been synonymous with the petroleum industry, but this is not stopping the kingdom from striving to diversify its energy sources.

Renewable sources could account for up to 10 percent of Saudi Arabia’s power output by 2020, an executive from the state-owned national oil company Aramco said.

“The proposed target is between 7 to 10% of peak electricity generated by renewables by 2020,” Ahmad al-Khowaiter, director of new business evaluation department at Aramco told Reuters.

The renewable energy would most likely be solar energy, he said, and Saudi Arabia will start exporting solar energy by 2020.

Khowaiter said the “strategic move into solar,” could be achieved in 10 years time, when the economy will be in favor of employing solar power.

The kingdom is facing a rapid increase in domestic power demand and is already looking at new ways of creating energy, including nuclear power.

Earlier this year, Saudi Arabia announced the establishment of a new energy complex, in an effort to diversify its oil-based energy industry. The Riyadh-based King Abdullah City for Nuclear and Renewable Energy will be tasked with research and application of nuclear technology and will oversee all aspects of a nuclear power industry.

Saudi Arabia’s economy is oil-based, with strong government controls over major economic activities. The kingdom possesses around 20% of the world’s proven petroleum reserves and ranks as the largest exporter of petroleum in the world.

Saudi Arabia plays a leading role in the Organization of the Petroleum Exporting Countries (OPEC) and has a petroleum sector that accounts for roughly 80% of its budget revenues, 45% of its GDP and 90% of its export earnings.

But the kingdom’s population growth and energy subsidies have increased domestic consumption of oil and gas, fueling concerns about the future of its energy economy.

“Let us give credit where it is due,” Meena Janardhan, a fellow at The Energy and Resources Institute (TERI) in Dubai told The Media Line. “This is an oil-rich region, and for countries like Saudi Arabia and the UAE to announce renewable energy commitments and initiate work towards achieving these goals, are very positive steps. It is not just economic motivation that turns the wheel in this case.”

“There is an ongoing shift in Saudi Arabia and in the region,” Dr. Theodore Karasik, director for research and development with the Dubai-based Institute of Near East and Gulf Military Analysis told The Media Line.

“It’s significant, because the UAE has taken the lead on this, and of course, the other states want to follow on this path. It’s part of the renewed interest in the environment, and the fact that they need to start moving towards the eventuality of when hydrocarbons run out. It’s 50 years away but that’s also why they’re moving towards nuclear energy. These countries have the highest carbon emissions in the world per capita and so they want to improve that,” he said.

Karasik and Janardhan agreed that the goal of making 10% of Saudi Arabia’s power output based on renewable energy by the year 2010 seemed feasible.

Regarding nuclear energy, some analysts say it is essential for meeting the kingdom’s energy needs.

“Saudi Arabia is using 15% of its oil output currently for producing electricity and desalinization of sea water, and in 10 years’ time it will be using 20% of its oil output for this purpose,” a Saudi political scientist, who asked to remain anonymous, told The Media Line. “Forty percent of the country’s population is under 14 years of age, and will in the near future build families and require more electricity and desalinized water. The petrochemical industry is requiring ever more natural gas,” he said. “Furthermore, nuclear energy costs 60% the cost of hydrocarbon resources, and the third generation [nuclear power] plants are said to be safer than their old[er] counterparts.”

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Abu Dhabi, United Arab Emirates (TML) – Two years ago, on Sept. 15, 2008, Lehman Brothers, one of the oldest and largest investment banks in the United States, went bankrupt. One of the largest and most significant bankruptcies in history, the event triggered what became a global financial crisis.

What has the business world in the Gulf taken away from the two years since the onset of the current crisis?

While the Gulf region at first seemed unaffected by the crisis, in the end its effects were just delayed, with Dubai taking the hardest hit. Once seen as the model of how Gulf states should prepare for a future without a dependence on natural resources, today the Dubai government’s investment arm, Dubai World, has debts of up to $60 billion. In February the International Monetary Fund estimated Dubai’s total debt to be as high as $109 billion dollars.

Yadullah Ijtehadi, managing editor of the business intelligence firm ABQ Zawya argued that two opposite forces collided as a result of the Lehman Brothers collapse.

“At the one end, we have demanded more transparency from companies and have punished them for being opaque or slow to reveal the truth about their business,” he told The Media Line. “But on the other hand, businesses have retreated into their shells and been more fuzzy about their business plans, their finances and their business outlook.”

“Caught in the middle are the regional regulators who are accused of not being quick enough to address the needs of the investors,” Ijtehadi continued. “Their performance has been patchy, at best, with a few good examples where they have been strict, but many occasions where they have been slow or weak in their action.”

“Mind you, this is no different from American and European regulators who also have a mixed report card since the crisis unfolded,” Ijtehadi said. “It is an especially tough time for all parties, and I think if the regulators can put in place at least some of the more robust policies and frameworks for corporate governance and transparency, the region would have at least learnt something from the crisis.”

Saudi businessman Ahmed Egal, chief executive officer of software firm AOST Inc, said that the main change taking place has been in bank lending.

“There has not been a change in the way people do business but there has been a change in way banks lend to their customers,” Egal told The Media Line. “They have had national and regional problems and have taken a hit and are now much less willing to lend in the traditional form.”

One of the main focuses in Dubai’s diversification plan was to develop the local real estate sector. Before the crisis struck, a new project was announced in the Emirates almost every week. When the crisis came, however, there was a drop in both financing and foreign buyers, forcing many projects to be canceled or put on hold.

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You will gain a new insight on commodity futures trading once you have decided to learn about trade commodities from commodity trading courses. In your commodity trading courses, you may learn about certain commodities such as grains or precious metals, or you may decide to acquire knowledge on the whole spectrum of global commodity markets. No doubt you have heard concerns about energy security and the crude oil trade on the New York Mercantile Exchange, and of how the price fluctuations can be caused by a whole range of factors. And what causes price movements in gold, silver and other precious metals and why should cocoa or coffee futures prices suddenly surge?

You can get all answers to your questions just by looking for good commodity trading courses. Finding excellent commodity trading courses will help you learn how to trade commodities and ultimately gain all the knowledge required for you to be successsful in trading. Firstly, if you are learning to trade commodities, find commodity trading courses that are currently offered. Either start your commodity education at home using study materials with an online training package or attend a top quality trading school where students cover all aspects of commodities and futures.

What are the advantages of attending a school that offers commodity trading courses? There is face to face contact with tutors and opportunities for one to one coaching. The coaches in your commodity trading courses may either have their knowledge from courses or they have perhaps traded the commodity markets and so have real live trading experience, which is a valuable asset to have in a coach. In a classroom, you can impart your ideas with other people who share your goal. Learning on location lets you watch and learn from “live” trades with your coaches, who may trade in real time as you look over their shoulder. This is valuable as it helps to explain in a live setting what you may have learnt in theory in your commodity trading courses. Such examples are valuable as they bring a real, sharp edge to your commodity trading education, and the tutors will help you as you create a personalised commodity trading plan. With the growth in trading centres, training providers now have locations globally and you may find one close to you, such as in London, Singapore, Dubai and Toronto, as well as major US centres such as Washington, Philadelphia, Chicago and New York.

There are also advantages in taking up online commodity trading courses. When your schedule is tight and your location is far from schools offering commodity trading courses, taking online courses will also help you learn about the fundamental and technical aspects of commodity trading. These online commodity trading courses will offer email contact with your tutors, as well as video tutorials, using charts, blogs and forums. You will also most likely have access to special software packages allowing you to practice trades and use different trading techniques, as well as CDs and DVDs covering the key learning points.

In commodity trading courses, you can expect to learn about the effects of supply and demand on commodity prices in fundamental analysis which takes into consideration the effects of inflation, wars and the economic cycle. Technical analysis in commodity trading courses is also important and includes understanding indicators on commodity charts, such as support and resistance, Fibonacci, moving averages, Japanese candlesticks and volumes of trade, which act as signals for when to exit and enter a trade. Commodity trading courses are likely to show you what a commodity futures contract is and how easy it is to trade electronically, how you place your futures order and set your commodity futures margin, as well as understand how hedging in commodity trading works. Other important things you can learn through commodity trading courses are: risk management, capital preservation, trading psychology and commodity trading plan. All these basic areas will be covered when you start learning to trade commodities through commodity trading courses.

Across the world commodity trading activity takes place on a range of modern, regulated commodity exchanges. A wide range of commodities will be traded between end user buyers and producer sellers under the umbrella of standard contract rules and commodity trading regulations.

In effect world commodity exchanges facilitate the buying and selling of raw commodities ranging from crude oil, copper and wheat to platinum and orange juice.

Some commodities such as crude oil and coffee futures have been traded for a considerable long time in mature markets, but now in the early years of the 21st century we are seeing new markets and futures contracts being introduced.

These more exotic commodity classes include carbon in the form of emission permits. With the growing concern about the serious environmental threats from climate change caused by greenhouse gases, a rapidly growing market has developed in emissions permits, a form of activity known as carbon trading.

For the foreseeable future it is likely we will see continual growth of markets which place a price on the environment, with further development in emissions, plastics and perhaps even water.

The basis of commodity trading activity is the buying and selling of futures contracts for a whole range of commodities. While the nickel or cocoa producer will use commodity futures contracts to hedge their future sales, commercial end users will also use these contracts for hedging against sudden spikes in prices.

Yet these two actors in the commodity markets are dwarfed by the high activity levels of speculators or traders who move in and out of the markets trying to make profits.

A futures contract represents a specific type of contract either to buy or sell a specified quantity of a commodity at a price determined by supply and demand at time of contract, at an agreed date in the future.

Across the time zones of the world there are commodity traders active in the markets either using an electronic trading platform or on the floor of an exchange, called open outcry. Over recent years the volume of electronically traded futures contracts has increased significantly, as a number of exchanges have combined to form a super commodity exchange.

Inevitably, with the access afforded by the internet, a combination of an accessible online trading software package and up to date market data, commodity trading has gradually become more available to the retail speculator, who will usually trade with smaller amounts of capital.

Some traders will prefer to focus on a specific area of the commodities markets, while others look more at the price action and do not worry unduly about the fundamentals of supply and demand for raw materials or food.

With the opening up of the emerging market economies such as Brazil, Russia, India and China (or BRIC countries), we are likely to see a continuation of the growth in commodity markets in these nations. For example, Dalian Commodity Exchange in China has ambitious plans to develop beyond its current specialism in agricultural commodities, and move to industrial metals and more.

While in the Middle East, Dubai is a growing financial centre and the Dubai Gold and Commodities Exchange has an interesting product range including WTI light, sweet crude oil, steel, plastics, gold and silver and the Indian Rupee.

While the world economy has suffered some serious shocks following the credit crunch and slowing rate of growth, with a number of companies and even some countries getting into serious financial difficulties, commodities as an asset class would appear relatively unimpaired.

Despite the short term difficulties, the global economy will continue to rely on key commodities such as crude oil, steel and copper, as well as basic softs like sugar, cotton and coffee, not to mention grains such as wheat, corn and rice.

For this reason we can expect commodity markets to see through these problems and for commodity trading as an activity to continue to be at the centre of world trade and finance.

Author: William Davies
Article Source: EzineArticles.com
Provided by: Excise Tax

Your decision to start learning to trade commodities will give you a completely new insight into the whole world of commodity futures trading. This could be within a specific sector such as grains or precious metals or perhaps across the whole spectrum of global commodity markets. Now doubt you have heard concerns about energy security and the crude oil trade on the New York Mercantile Exchange, and of how the price fluctuations can be caused by a whole range of factors. And what causes price movements in gold, silver and other precious metals and why should cocoa or coffee futures prices suddenly surge?

These are exciting markets to study, so finding a top quality commodities training provider is so important. How do you go about learning to trade commodities? What are the key areas you need to master with confidence so that you feel comfortable entering the global commodity markets? Firstly, if you are learning to trade commodities find where to do the commodity trading courses that may be on offer. Either start your commodity education at home using study materials with an online training package or attend a top quality trading school where students cover all aspects of commodities and futures.

What are the advantages of attending a commodity trading school? There is face to face contact with tutors and opportunities for one to one coaching. The coaches may either have their knowledge from courses or they have perhaps trade the commodity markets and so have real live trading experience, which is a valuable asset to have in a coach. When you learn to trade commodities in a classroom you can network with like-minded colleagues, sharing ideas with colleagues.

Learning on location lets you watch and learn from “live” trades with your coaches, who may trade in real time as you look over their shoulder. This is valuable as it helps to explain in a live setting what you may have learnt in elsewhere in theory. Such examples are valuable as they bring a real, sharp edge to your commodity trading education, and the tutors will help you as you create a personalised commodity trading plan. With the growth in trading centres, training providers now have locations globally and you may find one close to you, such as in London, Singapore, Dubai and Toronto, as well as major US centres such as Washington, Philadelphia, Chicago and New York.

What are the advantages of online commodity trading packages? Sometimes your location or commitments make it impossible to attend a physical location. So why not try an online training package featuring technical and fundamental aspects of commodity trading, which provide greater flexibility with your work schedule.

These online commodity trading courses will have offer e mail contact with your tutors, as well as video tutorials, using charts, blogs and forums. You will also most likely have access to special software packages allowing you to practice trades and use different trading techniques, as well as CDs and DVDs covering the key learning points.

What is likely to be covered when you begin learning to trade commodities? Expect to look at effects of supply and demand on commodity prices in fundamental analysis, which considers the effects of wars, inflation and the economic cycle. Technical analysis is also important and includes understanding indicators on commodity charts, such as support and resistance, Fibonacci, moving averages, Japanese candlesticks and volumes of trade, which act as signals for when to exit and enter a trade.

The course is likely to show you what a commodity futures contract is and how easy it is to trade electronically, how you place your futures order and set your commodity futures margin, as well as understand how hedging in commodity trading works. The whole area of risk management and preservation of capital is also an important aspect of learning, as is the psychology of trading and having a commodity trading plan. All these basic areas will be covered when you start learning to trade commodities.

Author: William Davies
Article Source: EzineArticles.com
Provided by: Guest blogger