The Futures - A Very Basic Introduction to Commodity Trading
A lot of this is handled through agents who often operate on behalf of groups of farmers or farmers pay into a company. They have very little involvement in the futures market. But you're right in the sense that it's not like the 19th century where the farmers themselves are actively involved in these forward futures contracts. And part of when we think about commodities trading, you have to think about the actual hubs or cities where this is taking place.
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The exchange of goods and services has existed since the earliest forms of civilization, from simple barter arrangements at the local town square to Phoenician traders navigating the Mediterranean with goods from Europe and North Africa. Today, however, the scope of exchange is truly massive, with online commerce coming to dominate nearly all segments of retail, and the scale encompassing transoceanic trade routes totaling 11 billion tons in maritime cargoes in 2021. Underpinning all this lies an extremely complex web of producers, shippers, pipelines, warehouses, and commodities traders that include the massive concerns such as Koch Industries in energy and Glencore in metals, with over 100,000 employees each. Billions of dollars have been made and lost in commodities futures, and as volatility continues to disrupt prices of everyday items from gasoline to grain, the trend of ever tighter global trade integration seen since the end of the Cold War may start to unravel as regional blocks choose to have closer and more reliable supply chains.
