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Factors affecting the commodity prices in 2023

 How Commodity market can perform in the year 2023?

As we are expecting not big upside movement into the Stock  market in the first half of the year 2023, therefore we may see more fund flow into the commodity market. Also as war in between the Russia and ukrain affecting the commodity prices especially in Crude oil commodity as well as demand and supply factor playing vital role in this commodity. many experts are expecting recession into the western countries as well as european countries in the coming months which can affect commodity prices.  As per our view Gold and silver commodities prices can fluctuate sharply in this year. As per our view commodity market can offer better trading and investment opportunties in the year of 2023. 

Factors which effect the commodity market:

Investing in the stock market is considered to be the best option in today's time and it would not be wrong if we say that the stock market is one of the best investment options at present. Some people also think that in this we can invest even less money. Due to which it is very easy for us to start investing. Today we will tell you that you can invest your money in the commodity market, although many people do not know much about the commodity market. The truth is that many expert investors in the stock market also invest in the commodity market.

Let us first understand what commodity market is and how to invest in it.

What is commodity market?

Just like in the stock market, investors invest in equity shares of various companies, in the same way, in the commodity market, investors invest in different types of commodities or raw materials. Commodities can also be of many types, such as silver, coal, gold, agricultural products such as coffee, wheat, pulses, etc.

Just like there are some factors in the share market which play a role in taking the equity market up and down, similarly many things affect the commodity market as well. Let us know what are the factors that affect the commodity market?

How does weather affect the commodity market?

The weather has a great impact on the trading of the commodity market. Commodity prices are highly fluctuating due to weather, especially agricultural commodity prices. There are still many countries in the world whose agriculture is still mostly dependent on the weather. Due to this factor, abnormal weather greatly affects the production of agriculture. For example, due to excessive rain or drought, the production of crops decreases.

   Apart from agricultural commodities, other commodities are also affected by the weather. Let's understand it from a quote like the use of air conditioning and fridge increases due to excessive heat. Due to which more production of electricity is required and it increases the demand for coal and other commodities.

 The movement of the US dollar also affects the prices of the commodity. In the international market, commodity or other things are transacted in US dollar only, due to which the effect of increase or decrease in the price of dollar has a lot on the commodity market as well.

 How does war or political instability affect the prices of commodities?

If there is a situation of war or political instability in a country, then there is a hindrance in the export of things from there, due to which the prices of commodities increase in the international market. We all know how the war that started between Russia & Ukraine just a few months back affected the crude prices. In the International market prices of metal commodities like Copper, lithium iron etc also fluctuate due to demand and supply of the commodities.

How do demand and supply affect commodity prices?

Just as the demand and supply of equities in the stock market and equity market decide the price of shares of companies, similarly in the commodity market

Commodity prices are often affected by demand and supply. If the demand for a commodity increases due to any reason, then the price of that commodity also increases. If you understand from a quote, if the demand for oil increases due to war or increase in industrial needs, then there is a huge jump in the prices of oil. Similarly, the increase in supply also leads to a fall in prices.

In the nutshell, from what  has been discussed above, It can be concluded that Fluctuation into the commodity market can be higher than the stock market so it is advisable to all investors and traders, always trade under the guidance of commodity advisors. Always keep eye on your trade and keep yourself up to date with the commodity market news.

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