>> Top most traded commodities of all time (part 1)
Iron ore can be mined from rocks and mineral ores. The majority of iron ore is used to produce iron and steel. However, iron extract can also be used to produce magnets and catalysts for a variety of uses. Iron is an easily exploitable commodity. Historically, the price of this commodity has been relatively stable because there is often enough supply to meet demand. However, since 2000 there have been significant price fluctuations due to changes in Chinese consumption.
Specifically, China has rapidly urbanized, requiring large quantities of steel to keep pace with economic growth. Because of this, President Trump's tariff policy also has an indirect effect on iron ore, causing prices to rise resulting in lower demand.
Corn is an important soft commodity. It is a major food source used to produce animal feed, ethanol, corn syrup and starch. The majority of corn is grown in the United States, followed by China, Brazil and Argentina. Like soybeans, the price of corn depends heavily on demand for feed and biofuels, as well as the strength of the US dollar and the weather.
In addition, agricultural subsidies, especially those of the US, can also have an impact on corn prices. Corn production is currently heavily subsidized in the United States, providing a strong incentive to produce and help maintain global supply.
Gold has been a sought-after precious metal for millennia because of its luxurious metallic gold and metallic color. Nowadays, gold is mainly used to produce jewelry and as an asset for investment. However, a small amount is also used industrially because it is capable of neutralizing most chemical and conductive reactions. The majority of gold is mined in China, followed by Australia, Russia and the United States. Gold is considered a safe-haven asset because it tends to hold or increase in value in times of economic and political instability.
For this reason, many traders change money into gold when the dollar is down, so the price of gold often has an inverse relationship with the value of the US dollar.
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Copper is an important base metal because it is an especially good conductor of both heat and electricity, and is resistant to corrosion and weather resistant. Copper is mainly used to produce wires, pipes, roof tiles and industrial machinery. However, it is also used to produce alloys such as brass and bronze.
Copper is mainly mined in Chile, followed by China, Peru and the United States. Because of many applications in industry and electronics, copper prices can fluctuate significantly depending on the level of economic output. On the other hand, supply may be affected by trade disputes, seasons and infrastructure concerns, especially by main copper suppliers from South America such as Chile and Peru.
Aluminum is another equally important base metal, and an exceptionally light and corrosion resistant metal. Aluminum is often combined with other metals such as copper, zinc and magnesium to form an alloy that is both strong and light. For these reasons, aluminum and aluminum-containing alloys are useful for commercial applications such as vehicle and aircraft manufacturing, packaging and construction. Most aluminum is produced in China, followed by Russia, Canada and India.
Oil and electricity prices can affect aluminum prices because separating this element from ore requires a lot of oil and electricity. Manufacturing and construction boost the demand for aluminum, so economic development in economies like China can have a significant impact on aluminum prices. Moreover, this is a commodity that the Trump administration has imposed tariffs, so the U.S. policy will likely play an important role in pricing aluminum.
Silver is the second precious metal on this list, and this is another element that has been sought a lot for thousands of years. Unlike gold, about 50% of the demand for silver can be attributed to its industrial uses, such as manufacturing solar panels, film centers or electrical contacts.
However, silver is similar to gold in that a large proportion of the demand for silver also comes from jewelers and investors. Silver is also considered a safe-haven asset, so its price will often rise during times of economic recession.
However, gold is often considered a more reliable investment because its price is less dependent on demand from industrial needs, which are often affected when economic output declines. In terms of supply, silver is usually extracted from ores of other metals, especially copper, so fluctuations in demand for these factors can also affect silver prices.
Source: Trader FX