International Commodity Trading
International commodity trading may be referred to as the trade, which is carried out between different nations.
Taking commodity trading to the global markets may also be referred to as international commodity trading.
History of international commodity trading:
The roots of the present day commodity trading can be traced back to the 18th century. There are evidences that the first commodities to be traded in the international future markets comprises goods, which were used by the merchants residing in Persia. In addition to these goods, other commodities traded during that period were spices as well as olive oil.
In the United States of America, international commodity trading commenced during middle of the 19th century when people indulged in "corn contracts" in regions around Chicago as well as "cotton contracts" in areas around New York.
Trends in international commodity trading:
There are many agreements as well as policies, which govern international commodity trading. Prior to 1974, emphasis was laid mainly on surplus disposal. Simultaneously there were also fears of exhaustion of resources. Majority of the governments channeled the resources in to the agricultural sector. This was true mainly in industrialized nations. This in turn restricted the price of domestic producers from rising. Owing to this channelization, the effect was strong particularly on the various products, which thrive well in the temperate regions.
There were few set backs faced in the arena of international commodity trading. The problem lay in the fact that there was no uniformity in the future markets. These practices prevailed during the 1980s. This gave rise to the following conditions:
- Protectionism pertaining to agriculture was given due importance
- Owing to the weak market conditions, the international commodity agreements or ICAs were sabotaged.