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Learn how commodity prices behave

The raw materials manufacturers used in creating products we consumers buy are called commodities. This could include agricultural products, energy products, metals, and a whole lot more. The prices of these commodities could vary from time to time, and with a lot of fluctuation occurring in historical commodity prices, it is indeed very hard to predict the future prices of worldwide commodities. In order for financial professionals to be able to make decisions with regards to commodity prices and their varying behavior, they have to do critical analysis of market history and the trends in historical prices of commodities.

Commodities are considered both as an asset and an investment. They are called real asset that is why they tend to react if changes in the economic fundamentals began to occur. The performance of a commodity as an asset can be measured by its returns shown on a commodity index. To illustrate the price of a certain commodity at a specific time in history, a historical commodity price index is needed. After a period of time, the indexed price’s average is calculated and determined. This determined average of the indexed price is said to be the historical price of a commodity. Commodity Prices can have fluctuations on them, and with these fluctuations, the speculation for future commodity prices can possibly be made.

commodities prices

As seen in the past year, it can be observed that commodity prices produce a wide range of changes and variability. Commodity prices continue to go higher or lower as it is influenced by a lot of factors. One of these is the occurring events which can alter the prices of commodities. Some professionals study the effects of occurring events on historical prices for a selected period of time. The data gathered from the studies conducted can be used to compare with previous results. Most of our technical analyst relies usually on charting tools for them to see and analyze observable recurring patterns in Historical Commodity Prices. Supply and demand factors, inflation and economic factors are among the other possible factors that could possibly affect the prices of commodities. These varying prices of commodities can affect both the consumer and the producer of these commodities.

Commodity prices are said to be cyclic, which means that they are bound to repeat their behavior after a period of time. Historical repetitions and patterns may be observed in commodity prices which have similar characteristics. If we use these cycles, we can then make a projection on the prices of commodities for both short-term use and long-term use in the future. Although much has been known and learned about the properties and behavior of the prices of some known world commodities, there is still a big gap in the understanding of why these commodity prices move and behave as they do. That is why we have to understand and learn more about their cyclical behavior because this can serve as the key for us to unlock the evolution the prices of commodities.