What Every Farmer Should Know About Commodity Trading
Farmers are still excited about the much anticipated Ogun State Economic Transformation Programme (OGSTEP) which is a window to national and international agricultural support in 2021.
But while waiting on that, here is something to think about; Commodity trading!
It has co-existed alongside the financial market for so long and involves the buying and selling of commodities like natural gas, metals, and soft agricultural produce. Well, if you did not know, now you do.
But, do you also know that in commodity trading, you can trade peer-to-peer (p2p) or directly via the stock market with the prices listed openly, ‘To Whom It May Concern?’
Hold on! Let me put that in a simpler term.
Peer-to-Peer trading signifies a physical and a one on one trading process; an example would be a cereal company signing a contract to purchase raw materials from their dealers in advance.
While trading directly via the stock market means trading online via the stock exchange market.
In either case, there is a broader range of options to suit your trading capacity such as the future contract, stocks, exchange-traded funds (ETFs), mutual and index funds, and commodity pools and managed futures.
Whatever option you choose, challenges like a disease outbreak or an uncontrollable situation like the recent pandemic could destabilize the agricultural sector and market trade.
So, learn to keep your ears to the ground.
Ever heard of Agricultural Commodity Index (ACI)?
Well, it is an important tool in commodity trading that you do not want to skip.
The ACI represents the economic or monetary state of each stock on the trading platforms. Its value for any stock shows if you will get a return on investment or a loss.
It aids a successful trading process, but you can’t trade without a platform.
You can try trading on platforms like Olymp, Binary option, AFEX commodity exchange limited, and many others.
In recent times, more platforms have emerged and there are bound to be fraudsters waiting to swindle you of your money.
Be sure to verify the authenticity of any platform you choose before you proceed.
The bottom line!
What every farmer should know about Commodity trading is, it is an amazing form of investment, especially with the recent fall and rise in the Naira and Dollar.
However, you need to have an in-depth understanding of it, through deep research and professional advice.
Before you stake on any product, be sure its agricultural commodity index is staring at you with a big grin.
Now you are informed.
You can go ahead and take that step!