Virtual Spread Betting

Soft Commodities

You can bet on the spread of future price of Soft Commodities (Softs) like Coffee and Soybeans as you can spread bet on the future price of crude oil, gold, the FTSE 100 etc. Soft commodity prices may increase rapidly on the back of high oil prices due to increased transport and energy costs. Prices are also affected by adverse weather conditions and political policies that force farmers to grow certain crops. But if you are spread betting on Softs what about the facts?

10 Facts for Spread Betting on soft commodities

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   A key factor affecting most Softs is the exchange rate. Because agricultural commodities are generally traded in U.S. dollars which means Soft futures prices will be affected by exchange rates. If no other influences, including supply and demand, so if the dollar falls against the euro, the price of commodities (in dollars) will increase and vice versa. This is not always guaranteed, but there is a significant correlation to take into account.

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   Some of the major soft goods that you can trade with the spread of large corporations Paris are: cocoa, coffee, corn, Lean Hogs, live cattle, oats, soybeans, soybean meal, soybean oil, wheat and sugar. Note soybean (USA) and soybean (UK)

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   The products are often divided in their main types eg coffee is marketed as better quality arabica (coffee or C) and lower quality Robusta

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   As mentioned above, Softs are generally traded in dollars, one of the exceptions is cocoa (London), which is listed in pounds sterling

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   When the spread of paris on the future price of Softs settlement date of your futures exchanges is normally within 1-3 months. For example, for wheat the settlement month are listed as March, May, July, September and December. The wheat market closed on August 20 in September and December wheat market closes Nov. 19

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   You can spread bet on all products including soft drinks tax free * and the FTC with companies like FinancialSpreads.com and IG Index

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   As with all Paris spread throughout your business units, for example, with wheat (London) market, you trade in pounds sterling per tonne, Robusta coffee is $ per ton.

The current spread for robusta coffee is $ 2,196 - $ 2,204. This means that you can bet on the spread of coffee to close below $ 2,196 per tonne or higher than $ 2.204 per tonne.

If you were Paris 2 pounds per dollar and the price moves a ton of $ 20 then your profit or loss would change by (2 pounds per dollar) x $ 20 = £ 40.

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   Although the units are marketed under the trade sets, where the spread of paris on the products you trade in the currency that suits you eg pounds per unit, euros or dollars per unit per unit

For example, Arabica coffee is traded in 0.01cents / lb (pound).

Therefore, you can bet 5 euros per 0.01 cent that Arabica goes up or down. If the price / lb then 0.15 cents, your profit or loss would change by 0 5 Euros.