6 most traded commodities you absolutely need to know

A commodity is a raw material used in production or consumed directly. It has become a popular asset to traders due to its high volatility, allowing them to take potential profit from price fluctuations.

This article outlines the world’s top six most traded commodities and how you can trade them.

List of the most traded commodities worldwide

1. Crude oil
2. Natural gas
3. Gold
4. Silver
5. Copper
6. Coffee

1. Crude oil, the most traded commodity

Crude oil is the most traded commodity in the world. This commodity is desirable to long and short-term traders because of its high volatility in price. The fluctuations in price make this commodity a lucrative asset if traded successfully.

Despite the potential return of trading oil commodities, you must stay informed of the news on its price determinants. This includes changes in supply and demand, geopolitical tensions, and currency values.

Brent and West Texas Intermediate (WTI) are two major types of crude oil. Brent Crude oil accounts for two-thirds of global oil pricing. This type of oil is mainly refined into diesel fuel and gasoline.

On the other hand, WTI crude oil is a lower sulfur type of oil that is cheaper to refine than Brent.

Both types of oil commodities can be traded through contracts for difference (CFD). CFD trading lets you speculate on the oil price without owning an asset.

2. Natural gas, a highly volatile commodity

Natural gas is a non-renewable type of energy commodity used as fuel. Examples of natural gas are methane, ethane, butane, and propane.

Natural gases are often the most traded commodities in the United States of America, Russia, Iran, Qatar, China, and Canada. They are also the top users of these commodities.

The leading producer and consumer countries determine natural gas prices based on market production and import/export volumes.

Other factors influencing its price are the availability and prices of coal, oil or nuclear and the climate season.

You may be wondering why winter and summer seasons affect natural gas prices. In winter, there is an upsurge in using natural gas for heating. At the same time, hot summer weather can increase demand for natural gas in power generation for air conditioning.

These weather variations lead to price volatility of CFD commodities related to natural gasses.

3. Gold, the most popular metal

Gold is the top three most traded commodities in our list. It is a metal commodity highly valued for its aesthetic appeal and ability to maintain value for a long time. It is also one of the oldest forms of currency in history.

Gold CFDs are a popular choice for traders seeking to protect their wealth during economic uncertainty. This leads to long-term price stability even during a price increase.

Gold commodities are always in any commodity trading platform online. A popular CFD trading platform, markets.com, lets you easily trade gold with various insight-driving tools you can only find on their platform.

4. Silver, less rare but still highly traded

Silver is a precious metal utilised in jewellery, battery production, and electrical applications.

Most silver is produced as a by-product of mining copper, lead, and zinc, with smaller amounts from gold mines. Peru, Mexico, and China are the top producers of silver.

Silver is also a safe haven for traders, similar to gold. However, silver is not seen to be as valuable as gold due to its rarity.

There is only a smaller amount of gold available in the world than silver, and the difference in their prices is mainly due to the supply-demand imbalance.

However, it is still one of the most traded commodities worldwide due to its practical uses in many industries, especially jewellery and tech companies.

5. Copper, broadly used industrial metal

Copper is widely traded globally due to its application commonly used for appliances, housing and electrical machinery.

Supply and demand are the main factors affecting copper prices. For example, a decrease in new home construction can signal a slower economy, leading to a drop in copper prices.

Countries like China and India have also increased demand for copper. This is due to these countries’ ability to mass-produce products that need copper as a primary element.

It’s unlikely that most people would require a significant amount of copper for their personal use. Therefore, copper is commonly traded as CFD commodities. You do not have to buy or sell the physical commodity.

You can trade it in a contract with an online CFD broker, reflecting the exact prices and market movements as the real product.

6. Coffee, most traded soft commodity

Coffee is the most traded soft commodity in the world. Coffee beans are cultivated across over 50 countries worldwide, including Brazil, as its largest coffee producer.

You can trade coffee on its main varieties: arabica and robusta. Arabica is generally considered to be of higher quality in taste, making it more widespread.

Arabica coffee beans tend to have more stable pricing as it is always chosen by coffee lovers. This type of coffee bean makes it the most traded commodity than robusta. Robusta is generally more volatile due to low consumer demand.

Tip when trading coffee in CFDs: You must consider the season and weather patterns of a producing country as they significantly impact the global supply of coffee and greatly influence its price.

How to trade commodities in CFDs

CFD trading is a flexible approach that allows you to speculate on the price movements of commodities without owning them.

Suppose you have decided to try and learn CFD trading. The first thing you must do is look for a reliable and reputable trading platform.

The platform you will use must be licensed and regulated by regulatory commissions. Make sure to check the footer of your broker’s website, where you should find the broker’s registration number and governing regulatory body clearly displayed.

You must also consider a platform that provides responsive customer support. A reliable platform usually provides its users with various modes of communication and prompt support to ensure their needs are met.

Finally, a platform must let you use a demo account to evaluate the quality and usability of the broker’s trading platform without risking your trading funds. This allows you to test the broker’s CFD trading platform for usability, reliability, and security.

Find the most traded commodities on markets.com

For beginner traders trying to pick the right commodity to trade in, it’s essential to have a good understanding of the market. This article’s six most traded commodities can offer valuable insights into what to expect in future trades.

The price indicators on each commodity will give you a clearer picture of what factors drive the movement of CFD commodities over a particular period. This will help you make more informed trading decisions and maximise your returns.

Use what you have learned in this article in the best CFD trading platform, markets.com. We have a list of CFD commodities on the spot and futures, plus commodity stocks and ETFs you can trade on a single account.

Start your trading journey today with markets.com.

When considering "Commodity CFDs" for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.