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An ongoing trade battle between the United States and China has magnified the impact of tariffs on commodity prices and economic growth. As we’ll soon see, trade barriers have a ripple effect on global markets, influencing everything from commodities to foreign direct investment (FDI).

Like any other market, commodities are influenced by a range of technical and fundamental factors. In the current macroeconomic climate, trade tensions are having a direct impact on commodities such as agriculture and crude oil. That’s because the two largest superpowers, the United States and China, have engaged in a tit-for-tat trade war that threatens to throw global economic growth off stride.

The impact has already been felt. China’s economy is fresh off its worst year of expansion in nearly three decades and the International Monetary Fund (IMF) has already lowered its growth outlook this year and in 2020 over the perceived trade threat. As a large consumer of commodities, China’s slowdown has had a direct impact on how commodities are priced.

Learn here about how an interest rate hike can affect commodities.

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Like any other commodity, natural gas is influenced by the forces of supply and demand. An understanding of both supply- and demand-side factors can help investors better evaluate fluctuations in natural gas prices to better gauge future market trends.

Natural gas prices have fluctuated wildly over the past three months. While this is partly influenced by the overall state of the energy sector, seasonal influences have contributed to the dramatic rise – and fall – in natural gas prices. An expected warm spell in February has placed further downward pressure on the commodity.

Learn here about how an interest rate hike can affect commodities.

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Traders venturing into the futures market for the first time need to consider the inherent risks associated with derivatives contracts and how they can be mitigated using hedging strategies. The first stop on our list is a concept called Basis Risk.

This article will help you understand the different types of basis risks that a trader may be exposed to.

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Henry Hub is the leading benchmark for U.S. natural gas futures. The story behind its rise to prominence sheds light on the relevance of transparency and liquidity in futures trading.

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Agriculture represents a key component of the commodities sector and overall U.S. economy. Investors seeking exposure to this sector are strongly urged to follow monthly crop production figures released by the U.S. government.

A quick glance at the data can yield valuable insights on the health and performance of agricultural goods.

Learn here about choosing the right commodity mutual fund.

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Every week, the U.S. Energy Information Administration (EIA) releases the Natural Gas Report, which provides the latest reading on the nation’s energy reserves. The report provides commodity traders with a more comprehensive account of supply and demand as it pertains to natural gas and the broader energy market.

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Agricultural commodities can be difficult to predict due to unexpected weather and competing incentives for farmers. Fortunately, there are many tools that commodity traders use to make predictions, including long-term weather forecasts and reports like the USDA’s Prospective Plantings report.

In this article, we will take a look at the USDA Prospective Plantings report, also known as the Planting Intentions report, and how commodity traders can interpret the data.

Click here to learn about choosing the right commodity mutual fund.

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There are a number of agricultural commodities that occupy both analysts and investors time, but there’s one with high volume that often seems to go unnoticed, and that’s sugar.

Wheat, corn and soybeans usually dominate the headlines as they pertain to agricultural investments with high daily volumes and their impact on global food supply and newly developed industries like biofuels. But sugar is a vital component in the food industry used in everything from food manufacturing to soda beverages like Coca-Cola.

One thing investors will note about many agricultural commodities like wheat is that there may be more than one type of contract that covers different varieties or strains of that crop. Similarly, they will notice that there are two different sugar contracts to choose from – world sugar #11 and U.S. sugar #16.

But unlike other commodities, the difference in sugar futures contracts isn’t the commodity itself, but rather where it trades. As the name suggests, sugar may be global (world sugar #11) or domestic (U.S. sugar #16). The reason is due to subsidies paid to sugar farmers and tariffs that tax the importation of sugar from other countries.

Learn more here about choosing the right commodity mutual fund.

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For investors of agricultural commodities, there’s no single piece of information more important than the WASDE monthly report.

The USDA releases a report covering world agricultural supply and demand estimates known as WASDE, which is often a source of volatility in commodities markets.

As the premier agricultural report, investors should be familiar with the language and understand what kinds of details the report contains as it relates to agricultural commodities. As a globally traded asset, agricultural commodities are prone to regional specifics, like weather, which investors may not be aware of otherwise. In addition, the report contains global estimates for supply and demand giving investors a baseline for understanding price movements and agricultural commodity fundamentals.

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Commodities traders often use strategies including mean reversion and other technical indicators to trade commodities. In order to do so, they need to measure the volatility and momentum trends in a commodity.

The Commodity Channel Index (CCI) helps investors identify changes in momentum by analyzing the current price level relative to an average price level over a given period of time – typically 20 days. From this information, investors can spot momentum trends and reversions in a trade.

In this article, we’ll break down the concepts used in the CCI and explain how they can be analyzed in context with a few examples.

Click here to learn more about choosing the right commodity fund.

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