Coagro Corp: Frequently Asked Questions in the Trading Business

Things you must consider in the trading business.

Like any other work field, the trading business has its own language: terms that only apply to this area or that are inherently connected to the business context. For many, these are the key to understand how these particular commercial activities work. But when you are starting in this field, knowing what these terms mean is fundamental to have success in the business. There are also questions that come to mind with them, and for those, we have some answers. In this article, you’ll explore the frequently asked questions in trading business accompanied by specialists of Coagro Corp.

What are commodities?

Commodities are nothing but the raw products for manufacturing companies. These are limited to products of natural origin, such as vegetables. Living stocks don't classify as a commodity, but their derived products, such as milk or meat, do.

Who can participate in commodities?

To work with commodities, you need to be either a provider, a buyer or an intermediary. The first two are the main participants, while intermediary can be a commodity trader, a transporting company, legal aid or the like. Anyone who wants to participate in commodities as commercial activity has to fall into these categories and have the permissions necessary to do so.

Can I be a commodity trader?

If you are looking into commodities as a work option, you need to get qualified to do so. The Series 3 test is an international certification fundamental to do this job. Then, you need to decide if you are going to work inside this field as a freelance entity or with a company. The latter is the best option if you are a rookie.

What’s the limit of commodity functionality?

Product's offer and demand limit commodities. The trading services work directly with the providers to ensure availability, and then they ensure a commercial benefit for all parties involved with potential buyers. All these operations are limited by the characteristics of the market, prices, estimates, and qualities of the product (if it is perishable or not).

Are commodity prices country-specific?

It depends on the product. Most countries seek to participate in international trade agreements that guarantee a free market. This allows products to regulate themselves with offer and demand balance. However, countries that produce unique products, such as Colombian coffee, have price leverage in this market and can delimit the range of price of the product, if they desire to do so.

How do commodity prices vary?

Prices on raw materials are self-regulated by the market. But these regulations can occur from one day to another, depending on market independent variables. These can be the weather, natural disasters or crop diseases that damage the production of a product, for example. These will generate a low offer, raising the prices for the product available due to the demand.

What’s commodity index?

These numbers indicate the value of a particular commodity within the commercial field. The prices in this index are limited by variables that can or cannot be country or regional specific and tend to be updated with regular frequency.

Is investing in commodities risky?

Every commercial activity involves a risk. Commodities are self-regulated and can change from one day to another. It’s not risk-free, but if you work with professionals, there’s a lower chance of losing money.

What’s future exchange?

These are contracts set between legal parties, without direct representation. These documents are limited to an agreement to trade certain products within a specific timeframe. They don’t involve the product as a physical entity. It's a legal binding future ownership and availability of a said product.

What’s stock exchange?

A stock exchange is an exchange where products held by the producer or temporary owner are sold to another party. It's a simple exchange of money and product in a basic commercial transaction, but can also be done by a trader inside an industry or company (an associate, for example) that sells the stock to a third party. A stock exchange is basically trading with elements that are available at the moment, with an intent on immediate commercialization.

Do you have any other questions regarding commodities and trading? You can leave them in the comments on our social media profiles! That way, you’ll have the expert team of Coagro Corp answering them for you. With over 20 years of experience in the trading field, they are you a to-go option if you want to know more about this market!