Futures Commodity Exchanges: An Overview

Commodities futures are a fast growing area in the forex market, and will be dealt with by a forex trader sooner or later. Therefore it would to his advantage to learn as much as he can about commodities and the exchanges were they are conducted in.

There are numerous commodity exchanges in the world, and some of the major ones are listed below.

By far, the largest commodity exchange in terms of volume is the Chicago Mercantile Exchange (CME). A subsidiary of Chicago Mercantile Exchange Holdings Inc, it is estimated that over half a billion dollars worth of futures contracts are traded in the CME yearly, and which are worth trillions of dollars.

The Chicago Mercantile exchange offers different derivatives in roughly four categories: rates, stock indexes, forex and commodities. Their indexes include the Fortune e-50, S&P 500, Nikkei 225, Nasdaq-100 and Tech-Comm SPCTR. CME financial derivatives and rates include 10-year Swap Rate, Eurodollar, Fed Fund Turn Rate and Japanese Government Bond.

If the forex trader is interested in commodities trading, the CME also includes various agricultural commodities and materials, and of course, a wide range of forex currencies.

Another well known commodity exchange is the New York Mercantile Exchange. (NYMEX). After 130 years, the NYMEX remains the platform of choice for investors and speculators interested in energy and gold futures. The NYMEX separates its financial transactions between the NYMEX Division, which processes energy and platinum contracts, and the COMEX, which handles gold, silver and other metal commodities.

The NYMEX Division includes Energy, Light Sweet Crude Oil, Brent Crude Oil, Natural Gas, and Gasoline/Crude Oil Spread. The direction of the oil prices in the NYMEX division is very influential in determining the price of oil in other markets.

The COMEX product line includes several metals, but the most important one for the trader is gold. Today, the value of gold is something that is monitored closely, for it is a factor in assessing the overall performance of the U.S. Dollar and consequently, the U.S. economy.

Another futures exchange worth looking into is the Chicago Board of trade (CBOT). Founded in 1848, it has grown into one of the leading derivatives markets in the world. Among its futures and financial derivatives are 10 Year U.S. Treasury Notes, 30 Year U.S. Treasury Bonds and 5 Year Interest Rate Swap. The CBOT index includes the Jones AIG Commodity Index and the Dow Jones Industrial Average.

Outside the U.S., the leading commodities futures exchanges include the EUREX (European Derivatives Market), LIFFE (London International Financial Futures Exchange) and LME (London Metals exchange). These establishments offer a wide variety of products and commodities to suit the needs of forex traders.

As vital as understanding the fundamentals of futures and commodities is knowing the exchanges where a forex trader can conduct business. By studying the options of each exchange, a trader can decided which is best for him.

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