Though less popular than the Metals or else Energy based Commodities such as Crude Oil, and Soft Commodities like Coffee provide lots of opportunity for anybody trading Financial spread betting or else spread betting.
Soft Commodities Trading with Spread Betting particulars:
There are many factors that will influence the food prices; at moment key areas are the High Oil prices, climate change, high fertilizer prices, speculation, & increasing consumption in larger developing countries like China, India & Brazil.
In last year US Crude Oil has also increased by more than 90% & Brent Crude Oil by 85%. Fine, we have seen & felt effects of that and Softs have as well seen a few significant changes. Soybeans have also experienced 70% increase, Cocoa nearly 50%, Corn 65%, and Robusta Coffee is 20% higher.
In case you are doing spread betting on the softs that you are not all alone. Hedge funds & even pension funds have also started trading all these markets to diversify. There is no doubt that they are as well interested in growth. With populations of BRIC (Russia, Brazil, India & China) countries becoming more affluent, which can just lead to an increased consumption.
As it is discussed above, high oil costs have also pushed up prices (transport & energy costs). Fertilizer prices are as well on increase. But, Mother Nature is also responsible for majority of the price spikes. Drought, hurricanes, excessive rain & crop disease all will reduce the supply
More further increasing influence is a move to the cleaner energy sources for example US ethanol program. That threatens to decrease amount of arable land accessible for the growing specific soft commodities. Since IG Index Analyst Grech currently reported “Land is fixed source that has an unique climate conditions suited to grow some of all these soft commodities. In case ethanol program, all along with some other alternative, the soft commodity derived energies, carries on to grow, and then demand for some soft commodities may accelerate. Factor in the home consumption growth in equation & future demand for some soft commodities can very easily outstrip the supply”
Naturally you may trade softs such as coffee, soybeans as well as other commodities such as Crude Oil & Gold with companies such as FinancialSpreads.com & IG but be very careful. Most of the commodities are been traded in the US Dollars & exchanges rates will affect the prices as fast as Mother Nature.