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The Secret Financial Life of FoodFrom Commodities Markets to Supermarkets$
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Kara Newman

Print publication date: 2014

Print ISBN-13: 9780231156714

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231156714.001.0001

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How Does Commodities Trading Work?

How Does Commodities Trading Work?

Chapter:
(p.5) Chapter One How Does Commodities Trading Work?
Source:
The Secret Financial Life of Food
Author(s):

Kara Newman

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231156714.003.0001

This chapter explains how commodities trading works. It first considers how the commodities market evolved into what we know today before discussing how the modern commodities market works and how the trading of food-based commodities influences what we eat and what we pay for food. Many traders like to point out that the concept of grain “futures” dates all the way back to the days of the Hebrew Bible, when Joseph analyzed the pharaoh's dream of cattle and crops, discerned that a drought would come, and diligently went about storing immense amounts of grain. Others insist that the birth of the markets took place in Osaka, Japan, in 1730. The first futures market in the United States is the Chicago Board of Trade, established in 1848. The history of America's commodity exchanges runs a parallel course with the history of industrialization and technology. This chapter discusses a number of key market basics, such as what a futures contract is, the key players in the futures markets, what drives commodity prices, and the difference between food and “food commodities”.

Keywords:   commodities trading, commodities market, futures, futures market, Chicago Board of Trade, commodity exchange, futures contract, commodity prices, food, food commodities

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