On the Internet: Commodities Trading
by CI Staff
A commodity is a physical substance (food, grains, or metals, for example), which investors buy or sell, usually through futures and options contracts. Foreign currencies and financial instruments (including stocks, bonds and indexes) are also traded on commodities exchanges using options and futures contracts.
Futures contracts give holders the right and obligation to conduct a specified transaction at a future date and a predetermined price. These contracts are standardized, regulated by an agency and guaranteed by a clearinghouse. Some futures contracts are settled by the physical delivery of goods, others are settled in cash.
An option is exactly what it sounds like: the option (but no obligation) to buy (a call) or sell (a put) a specified security or commodity either on or before a specified date at a predetermined price.
Investing in commodities is one way for individual investors to diversify their portfolios. You can also invest in a mutual fund that invests in commodities, but for those interested in directly investing in the commodities market, there are a lot of Internet resources to help you analyze, pick and track your investments.
Chicago Board of Trade
The Chicago Board of Trade (CBOT) was established in 1848, and in the summer of 2007 the CBOT merged with the Chicago Mercantile Exchange (CME). The CBOT offers free quotes, charts, contract and trading information, and educational sections for a variety of products. The CBOT trades agricultural commodities (including corn, soybeans, wheat and ethanol), interest rates, Dow products based on a various indexes and metal (gold and silver).
Each product category offers recent market news and articles including numerous tutorials. The Agricultural and Dow sections include a monthly update, which provides traders with a summary of related trading activity on the CBOT. The Interest Rate section has data on swaps, Treasuries, federal funds, spreads and more.
Each product area includes a Notice & Expiration Calendar and allows you to filter products by type and date. The results include delivery, intent, settle and expiration dates for futures and options.
CBOT provides real-time and delayed charts and quotes, historical data and wireless quotes. Real-time quotes are available through CBOT Advantage, an on-line charting and streaming market data program. You can try the program for free for 30 days. Subscriptions range from $50 to $105 per month based on add-ons; a free 30-day trial is available. A wireless version of the program is available for $24.95 per month.
An Education center offers a wealth of classes, tutorials, webinars, a glossary and a trading simulator.
Chicago Mercantile Exchange
The Chicago Mercantile Exchange (CME) was founded in 1898. The CME’s Web site offers options and futures traders real-time market data and quotes, contract data and educational tools. There isn’t much overlap between the types of products traded on the CBOT versus the CME.
CME products include commodities, equities, foreign exchange, interest rates, real estate and weather. For each product category, you’ll find recent news impacting the commodities markets, an education section, and a list of resources for traders including links to related Web sites.
For each specific product within the larger category, you will find detailed information about the futures and options offered for trading. There is an overview of recent news, an “About” section that includes a discussion of the specific product, details about contract specifics and contract listings, trading hours, calendars and a link to additional resources.
The Market Data area provides real-time, delayed and wireless quotes for all traded products as well as charts and graphs with historical data. Real-time data is available for free for only a handful of products via Adobe Flash Player. All other free data is delayed. Real-time quote packages start at $30 per month. CME’s Web site also allows electronic trading.
Finally, the Education Center offers a glossary, how-to articles and a trading simulator to help beginners learn to trade futures and options. You can also receive the CME’s free quarterly E-newsletter.
BarChart.com is a futures and equities Web site for traders that offers some of its data, charting, analysis tools and commentaries for free. The homepage provides an overview of the current market along with delayed futures data. Futures discussed on the site range from currencies and energy to a variety of agriculture commodities and indexes. The Futures section of the site includes a free daily price data table, links to commentaries, a futures forum for investor discussion and some information on options. You can search for specific futures contracts by symbol. Educational materials on futures investing are available. Subscriptions to real-time data for research, analysis and charting start at $30 per month.
Commodity Research Bureau
The Commodity Research Bureau (CRB) is a commodities and futures research, data and analysis firm. You can sign up to receive a variety of data, including end-of-day and historical price and contract information for a fee. Daily price downloads are supported for over 150 agricultural product markets. The CRB provides numerous commodities trading and analysis tools for both fundamental and technical analysis and offers a variety of newsletters. All of the data, newsletters and tools are subscription based. Packages can be tailored to individual needs.
Inside Futures offers a wealth of tools and materials to help beginning and experienced futures traders learn the ropes. A small amount of options data can also be found on the site. The home page provides commentaries on the day’s commodities trends as well as charts showing the day’s market movers. The Charts & Quotes section offers free interactive charts with technical indicators for a variety of commodities including foreign currencies, cattle, metals, hogs, indexes and more. You can also research individual futures contracts by searching by symbol or broad market category. Detailed contract information includes the contract date and current, open, high and low prices. The site uses BarChart.com to generate delayed charts for futures. Recent and archived commentaries are found in the Commentary section. There is also a Q&A with the experts where you can submit your questions and read answers to previously asked questions. You can discuss futures with other investors by linking to FuturesBoard.com through the Forums tab.
The Education area provides tips, articles, answers to frequently asked questions and advice on futures trading. You can also use the site to find a broker to help you trade futures and see a trading calendar that details important trading dates. The site is free.
Kansas City Board of Trade
The Kansas City Board of Trade (KCBT) was founded in 1856 and mainly sells futures and options dealing with wheat but also sells the ValueLine stock index futures contract. The home page offers market commentaries and news as well as a table with daily pricing and contract data for a variety of wheat contracts. You can get current and historical quotes and charts, download a daily wheat pricing spreadsheet, and get real-time quotes for the ValueLine futures in the Quotes & Charts section. The KCBT Review is a daily newsletter covering the wheat futures market. The KCBT site allows electronic trading. The site is free.
National Futures Association
The National Futures Association (NFA) is the self-regulatory organization for the U.S. futures industry. The association develops rules, programs and services to safeguard market integrity and protect investors. The NFA Web site is free and offers a great deal of educational materials (found in the Investor Learning Center) on futures trading as well as regulatory and compliance data. If you have a complaint, you can file it on this site.
TradingCharts.com offers free (but delayed) intraday quotes and charts for commodities traders. Data is organized by commodity type (including agricultural commodities, energy, currency and metals) then by specific commodity. You can see daily, weekly, monthly and historical prices; a current quote; recent news; and a chart for each commodity. The quotes page must be manually refreshed for updated data.
Charts offer limited customization by timeframe and type of graph. Below the chart you will find news and an explanation and analysis of the chart’s technical indicators. Java-based charts are more interactive and allow you to input technical indicators, change the time period and zoom in or out. While all of the data on TradingCharts.com is free, you have to be willing to put up with its numerous pop-up ads.