There are at least a dozen major exchanges that serve as markets for commodities around the world. Each of these specializes in certain commodities, while others trade in completely different sets. The following is a brief history of these exchanges:
1) Chicago Board of Trade (CBOT): This commodity exchange was established in 1848. It trades financial and agricultural contracts. Originally, this exchange only traded agricultural products such as corn, soybeans, and wheat. Now, it offers futures and options contracts on a variety of commodities including silver, gold, energy, and US Treasuries. In recent years, the CBOT has added electronic trading features, which is markedly different from the previous market. of open auctions. On 10/18/2005, the Chicago Board of Trade offered an initial public offering on the New York Stock Exchange. It appears under the ticker symbol “BOT”.
2) Chicago Mercantile Exchange (CME): Another major exchange is also located in Chicago. This, popularly known as CME, has been in business for over a hundred years. The main products traded here are live and fattening cattle, pigs, pork belly, lumber, milk, butter, and fertilizers. Now, it serves as a market for stock indices, interest rate, foreign exchange, and individual stock futures. One of the rather unique instruments that are traded is the weather derivative. These futures contracts speculate on the weather, anywhere in the world, at different times of the year.
3) New York Mercantile Exchange (NYMEX): Heading out of Chicago to another New York financial center, we have the NYMEX. This is one of the oldest exchanges in the United States. It specializes in petroleum and metal products. Between these two specialties there is a wide variety of options available.
4) New York Board of Trade (NYBOT): Sticking with New York City, we have the NYBOT. This was established as the first commodity exchange in the country. It trades cocoa, coffee, sugar, frozen orange juice, cotton, and many other agricultural items. This particular exchange also trades currency pairs.
5) Other: Outside of the US, there are some major commodity exchanges, such as LCE and TOCOM, in London and Japan, respectively.
As you can see, commodity bags are easily available all over the world. Not only are there commodity exchanges that specialize in certain types of trading; there are some that will trade a wide variety of products as well. These exchanges can trade in everything from the mundane to the extravagant. We hope this overview has piqued your interest in the world of commodity trading.
