What Is Commodity Trading? Markets, Products and Price Drivers

Commodity trading explained: the main commodity groups, why most commodity prices come from futures and what the forward curve means for a held position, what moves prices, when each market trades, and how commodity CFDs work at MarketsAll.

Commodities are physical: a barrel of crude has to be extracted, moved, stored and consumed, and every one of those steps is a place where the price can be disrupted. That physical layer is what makes commodity markets respond to weather, shipping and cartel decisions as readily as to interest rates — and it is what you are trading even when the instrument is a CFD that never touches a barrel.

Key Takeaways

• Hard commodities are extracted (energy, metals); soft commodities are grown (grains, tropical softs, livestock). Their drivers differ completely.
• Most commodity prices come from futures contracts, which expire. A position held across expiries pays a roll cost that can erode returns while the spot price is flat.
• Supply is slow to adjust and demand is not, which is why commodity price moves are sharper than in most other markets.
• One lot means a different quantity on every commodity. The contract specification decides the exposure.

The Groups

Gold behaves less like a commodity than like a monetary asset — it responds to real interest rates and the dollar more than to industrial demand. See gold trading guide and oil trading guide.

Where the Price Comes From

There is no continuous global spot price for crude the way there is for EURUSD. The quoted price is a futures contract for a specific delivery month. Contracts expire; the set of prices across months is the forward curve, and its shape has a name:

• Contango: later months cost more. Common where storage is expensive.
• Backwardation: later months cost less. Usually signals immediate scarcity.

Why the curve matters to a CFD trader: any continuously held position must eventually move from the expiring contract to the next. In contango, the next contract costs more; roll into it repeatedly and the position loses value while the spot price does nothing. Brokers handle this either by adjusting a continuous instrument at each roll or by listing dated contracts that must be closed. Which applies to each MarketsAll commodity is in its contract specification.

Sizing and Margin

Commodity CFDs are sized in lots, and the contract size varies more than in any other asset class. For illustration, a 1,000-barrel crude contract at $78 is $78,000 of exposure per lot; a $1 move is $1,000. Account leverage runs up to 1:200; the figure applied to each commodity is in its specification and is typically lower for the more volatile ones. See what is a lot.

What Moves Prices

Supply. Physically constrained and slow: OPEC+ quotas, mine output, planting decisions, disruptions, weather, sanctions. New supply takes years, which is why demand shocks produce sharper price spikes here than elsewhere.

Demand. Global growth for energy and industrial metals; seasonality — gas in winter, gasoline in summer; substitution when prices stay high.

Inventories. The clearest real-time read of supply against demand. Weekly US crude inventory data is among the most watched releases in any market. See how to use an economic calendar.

The US dollar. Most commodities are priced in dollars; a stronger dollar makes them dearer everywhere else and tends to weigh on the dollar price. See how the US dollar affects commodities.

Interest rates. Holding inventory costs money; higher rates raise it. For gold, the effect is direct: no yield, so it competes with real returns on cash.

Trading Hours

Energy and metals CFDs trade close to 23 hours on weekdays with a short daily break. Agricultural products have limited sessions and long daily closures, during which weather and crop reports land — and prices reopen accordingly. All close for the weekend. See global market trading hours and gap risk.

Volatility

Natural gas is the extreme: daily moves of several percent are routine. Crude typically moves 1.5–3% a day, more around inventory data and OPEC+ meetings. Gold is comparatively steady. Position sizes appropriate for a currency pair are inappropriate here; see position sizing and volatility and liquidity.

Worked Example: A Flat Market That Still Costs

Long a crude CFD priced off futures for six months in a contango market. Spot price at the end: unchanged. Six monthly rolls, each into a contract priced 1% higher than the one left.

This is a structural cost of the instrument, not a market view going wrong.

(Illustrative. Roll cost depends on the curve's steepness and how rolls are applied.)

Key Risks

• Volatility with leverage. A 3% day on crude at illustrative 1:10 leverage is 30% against the margin.
• Roll and contango on held positions.
• Gaps across daily closures and weekends; supply shocks that dislocate prices.
• Concentration. Long oil, short USDCAD and long an energy share are one view. See correlated positions.
• Seasonality treated as a rule. Seasonal tendencies are real and unreliable.

How to Trade Commodity CFDs at MarketsAll

Commodity CFDs are available on MetaTrader 5 and Web Trader across all account types; listed instruments include XAUUSD, XAGUSD, XPDUSD, BRENT, WTI and NGAS. Before a first position: read the contract specification (contract size differs more here than anywhere), establish how rolls are handled, identify the scheduled data for the instrument, and size for its actual volatility.

Do I have to take delivery?

No. Commodity CFDs settle the price difference in cash.

Why does my platform price differ from the spot price quoted elsewhere?

Most commodity CFDs price off a futures contract, and different sources reference different contract months.

What is the most volatile commodity?

Natural gas, by a wide margin among the commonly traded ones. It is not a suitable first instrument.

Is gold a commodity?

Formally, yes. It trades as a monetary asset — off real yields and the dollar — more than as a commodity.

Can I hold a commodity CFD long term?

It is possible; daily financing and, in contango, roll cost both work against it regardless of price direction.

Related Guides

Gold trading guide · Oil trading guide · What is a lot · Contract specifications on MT5 · Global market trading hours · How the US dollar affects commodities