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What are the major factors that impact commodity prices?

Commodity Prices

The three major factors that impact commodity prices are weather conditions, economic and political conditions, and government policies.

Weather conditions: Agricultural commodities are traded in majority in the global markets, and the weather affects production of these goods. Sudden changes in weather can impact production. Inadequate or excess rainfall, droughts impact the availability of the produce which shorten the supply and increase the demand.

Economic and political conditions: Price of commodities is also dependent on the economic conditions of a geographic area along with the political conditions. The producers and the consumers of that region work their supply and demand knowing the conditions. A weak economic condition reduces the spending power of consumers, leading to a fall in demand, which results in movement of prices.

Government policies: 
Changes, whether minor or major, in the government policies, reflect on the price of a commodity at large. The change in import/export government policies. For example, increase in import duty on edible oil results in a hike in its price. The buyer and seller work their supply and demand respectively with respect to the policies.

Other factors like currency movements, inflation, seasonal variations,are also importance factors that contribute to fluctuations in commodity prices

(i) Price movements of other commodities in combination with global demand for commodities such as gold or silver in the commodity livemarket

(ii) Global, and in particular US, inflation impacts the prices driven by rising money supply.

(iii) The trade and growth imbalances against the US and the resulting twin deficits that turn into a fear factor.

(iv) The activities by the central bank like money printing and sales also reflect on prices of commodities.

(v) Private and physical demand and supply also affect the price of a commodity.

Given the above factors, you can now decide which exchange to choose and work with the brokers with lowest brokerage charges. There are also companies that provide commodity advisory online to its traders which allow them to freely sync with the exchange and keep themselves updated. Your broker can also be a source of commodity advisory. You can now begin to trade safely after researching well and understanding the global commodity marketwith the commodity market in India and how it works.

How can I get these equity shares


Equity shares can be "bought" through the stock market when a company makes an offering. You could also purchase them from other investors who are willing to sell their holdings for various reasons through a trading account

I am interested but unsure of how to invest in share market. Who can help me


If you are apprehensive but want to invest in the share market, an experienced guide who can be a stock broker would prove to be invaluable

A stock broker specializes in dealing with shares, mutual funds, and other such financial instruments. They could be individuals or companies. They can advise on the best ways and companies to invest your money in and even deal on your behalf. Some do this in exchange for a fee.

If you are a newbie and wondering how to invest in share market, a stock broker can prove to be beneficial and help you get the bang for your buck!