Commodities Spread Betting: Compare Different Types
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Commodities are goods which are traded on the financial market. Commodities are usually in futures contracts on stock exchanges. Two main types of commodities are traded, soft and hard commodities.
Soft commodities come naturally from the earth by being grown. Examples are coffee, cocoa, corn, soybeans, sugar, and wheat. Hard commodities like Gold, silver, and copper, are extracted.
The most popular and commonly traded commodities are cocoa and sugar. Others are soybean meal, lean hogs, coffee, soybean oil, and others. Other commodities are available for trading and found on exchanges.
In looking for spreads for commodities, one needs to find a firm. One is searching for a betting firm which will provide tight spreads. Commodity prices do not change from one county to one country.
Spreads will vary slightly from one company to the next company. Spread betting firms understand investors are comparing prices. Typically spreads are close to each other because of this competition.
In times of volatile markets spreads may differ quite a bit. The reason is the markets are fluctuating so fast on exchanges. This prevents companies from keeping up with current spreads.
The price of Gold is the same no matter which stock market exchange. Betting firms, however are offering spreads with slight differences. The Gold daily spread difference is pretty standard with all firms.
However, the difference in the Gold futures spreads vary from 7 to 14. Firms are around a spread of 7 or 8, but one has a difference of 14. The minimum bet size from all firms is a standard £1 on commodities.
The same pattern can be seen on the commodity Brent crude oil. The daily spread is fairly common and is right around 5 or 6. Most firms have the Oil futures price difference sitting at 5.
However, currently two betting companies have the oil spread at 8. These two spread betting companies are Spreadex and IG Index. Spread bettors will want to evaluate all spreads from betting firms.
US crude oil spread quotes are similar to the Brent crude oil. Spreadex and IG Index have wider spread differences of 8 points. The other firms are keeping tighter spreads with a difference of 6.
Commodity prices change a lot especially when major weather occurs. A hurricane may completely destroy crops of coffee in South America. The result is less coffee and as supply is lower, prices increase.
Volatility of markets influence spreads quoted from financial firms. For this reason, it is important to always compare commodity spreads.
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