There is no shortage of financial instruments on offer for investors and speculators to trade. Almost anything that can be, has been turned into a security or a derivative and made tradable in one way or another. Everything from valuable and practical commodities like precious metals and oil to the less obvious and questionable such as unsecured debt and catastrophe bonds.
Despite there being a seemingly endless list of financial assets available to trade, you may be wondering, out of all these choices, what are the most traded commodities in the world.
What is a Commodity
A commodity is a raw material that can be used to produce other finished goods. A raw commodity cannot be consumed in the form that it is sold on commodity exchanges.
For example, coffee, which is one of the most traded commodities in the world, cannot be simply picked from a plant and put into a cup. Coffee needs to go through a complicated process before the beans (whole or ground) are ready to be used in a cafe or sold in a store. How coffee beans are processed is what distinguishes different brands. As it is sold on exchanges, coffee is cleaned, dried and packaged in sacks.
For the commodities exchange market to function, all producers must work to the same standard. A barrel of crude oil produced by ExxonMobil and Chevron should be at the same standard, so brokers, exchanges and buyers are indifferent to the source of the commodity.
All exchange-traded products must follow established standards. There are rules governing the purity of metal alloys and quality of foodstuffs.
What are the Top 10 Most Traded Commodities in the World
There are a few ways to determine the most traded commodities. The list of most traded products and goods could be based on the number of contracts traded on major Futures and Options exchanges.
As commodities are traded on many different exchanges around the world with varying ticker symbols and contract specifications, it’s tough to really calculate the trading volume. Also, many commodity deals are done over-the-counter in private agreements. Here is a list of ten most traded commodities in the world.
The energy commodity market is by far the largest in terms of contracts traded and turnover. While there are many types of energy commodities available to trade, it’s the black gold which is traded the most. Brent Crude Oil is mostly traded on the ICE (Intercontinental Exhange), whereas WTI is mostly traded on CME (Chicago Mercantile Exchange). The Brent Crude Oil production is more scalable than the competing WTI. As WTI is drilled and stored inland, there are a number of logistical obstacles that limit production.
Brent Crude Oil
In 2019, there were 246,921,939 Futures and Options Contracts traded on the ICE.
- Largest most liquid exchange for trading Brent Crude Oil is ICE.
- The ticker symbol used on ICE is BZ.
- The contract size is 1,000 Barrels (1 Barrel = 159 Litres / 42 Gallons).
West Texas Intermediate Crude Oil
In June 2020, following the WTI Futures price crash, the NYMEX (New York Mercantile Exchange) revived trading volumes, with an average of 1,870 contracts being traded each day.
- The most liquid exchange for trading WTI is NYMEX, which is owned by CME Group.
- The ticker symbol used on NYMEX is CL.
- The contract size is 1,000 Barrels (1 Barrel = 159 Litres / 42 Gallons).
Precious and Industrial Metals
Metals are an integral part of our everyday lives. Technology, construction, fashion and investing are the main industries which demand vast amounts of metals.
Global steel production in 2018 was 1,803 billion tonnes, and more than 530 million Futures Contracts of Steel Rebar were traded on the Shanghai Futures Exchange. In contrast, there were just 458,999 Steel Futures and Options Contracts traded on the London Metal Exchange in 2019.
- Largest trading volumes take place on Shanghai Futures Exchange and London Metal Exchange.
- The contract size is 20 short tons. A short ton is an imperial ton, which is lighter than a metric ton, hence the name short ton. A short ton is 2,000 lb, which is 907.19 kg.
- Different standards of steel are traded on exchanges around the world. There is scrap steel, hot-rolled coil steel, steel rebar and others.
In 2019, 37,091,448 Futures and Options contracts were traded on the LME. COMEX holds the record for the most traded copper Options contracts in a single day. On Friday the 21st of September 2018 8,089 contracts (91,727 metric tons) were traded.
- The most liquid exchanges for trading Copper are LME and COMEX.
- The ticker symbol on LME is CA, and HG on COMEX.
- The contract size is 25 tonnes on LME and 25,000 lbs on COMEX.
In 2019 the Singapore Exchange traded 12,476,340 Iron Ore Futures Contracts, which is a massive 1,247.7 million tons.
- One of the most liquid exchange for trading Iron Ore is the SGX.
- The ticker symbol on SGX is FEF.
- The contract size is 25 tonnes on SGX, and for comparison, the contract size is 25,000 lbs on US-based COMEX.
In 2019, 269,933 Futures and Options contracts were traded on LME, which is almost as much as the daily turnover on the COMEX. According to the LBMA (London Bullion Market Association) members of the London Precious Metals Clearing Limited (LPMCL) had registered 242.8 million ounces of gold had been cleared through 2019. Contrary to what many people think, gold is not the most expensive metal to trade.
- The most liquid exchange for trading Gold is LME.
- The ticker symbol on LME is AU.
- The contract size for gold on LME is 100 troy ounces.
In 2019, 70,800 Silver Futures and Options contracts were traded on LME and according to the LBMA (London Bullion Market Association) member of the London Precious Metals Clearing Limited (LPMCL) had registered 3,044.9 million ounces of silver had been cleared through 2019.
- The most liquid exchange for trading Silver is LME.
- The ticker symbol for Silver on LME is AG.
- The contract size is for Silver is 5,000 troy ounces.
A lot of traders forget or overlook agricultural commodities as trading instruments. Soft commodities like Coffee and Cocoa are among the most traded and consumed goods in the world.
In July 2020, 1,756,010 Coffee Futures Contracts were traded on the ICE. In the US alone, the retail coffee industry is worth $18 billion annually. The enormous global demand makes coffee one of the most traded commodities in the world.
- One of the most liquid exchanges for trading Coffee is the ICE.
- The ticker symbol for Coffee on ICE is KC.
- The contract size for Coffee is 37,500 pounds (approximately 250 bags).
In 2019, 39,350,157 Futures and Options contracts of Soybean were traded on the CBOT (Chicago Board of Trade). In addition to the main contract, there are various soybean related commodities. For example, Soybean Meal and Soybean Oil, which both have high annual turnover on the CBOT.
- One of the most liquid exchanges for trading Soybeans is the CBOT.
- The ticker symbol on CBOT for Soybeans is ZS.
- The contract size for Soybeans on CBOT is 5,000 bushels (~136 metric tons).
In July 2020, 1,443,289 Cocoa Futures Contracts were traded on the ICE. Almost five million tons of cocoa beans are produced each year.
- One of the most liquid exchanges for trading Cocoa is the ICE.
- The ticker symbol for Cocoa on ICE is CC.
- The contract size for Cocoa is ten metric tons.
A Summary of the Most Traded Commodities in the World
The most traded commodities for decades have been firmly established as the biggest markets, most liquid and commonly traded worldwide. The significance of these most traded goods has even influenced the top 5 most traded currencies in the world.