Trading commodities can be difficult, particularly if the market is versatile. Not only are there a number of variables such as political uncertainty and economic standing, but there is also the growing issue of import and export tariffs that can have a profound effect on prices. In this article, we will be looking into how trading of commodities can lead to an increase or decrease in their process and how this can affect the business sector.
The Impact Of Oil Prices
Oil prices benefit a number of businesses as well as individuals as the higher the price for fuel the higher transport costs will be. Though there are many questioning how to trade commodities to make the best possible return of investment, it is important to look into the effect that this could have on the business sector. As the price of fuel increases a number of sectors are affected, whether this is retailers selling tires or other products that are a by-product of oil. Each of these will need to increase their selling price in order to make a profit, which could be problematic for those not able to raise the price.
The Price Of Wood
Though the cost of wood would not normally affect the average person, it can have a huge impact on the building industry as well as timber yards up and down the country. Though there will likely be a price increase as a result of this, some businesses could experience a drop in the number of sales as a result, leading to a difficult time for this specific business sector.
Cotton Prices And The Retail Sector
Though it may not seem like much, a rise in the price of cotton can have a significant impact on the retail sector. As the price of trading such commodities rises, this leads to an increase in manufacturing prices that subsequently lead to a price increase when it comes to the general retail price. Though this is completely dependent on the brand and their own personal mark-up strategies, the rise in price could be problematic for a number of smaller businesses that cannot afford the sudden price increase for raw material.
Gold Prices And Their Impact On Jewellery
Though gold prices remain relatively stable, there could be an impact in a number of business sectors when the price decreases as well as when it rises to a new height, as it can greatly determine revenue. Whether this is of a supermarket with a jewellery department or a stand-alone jeweller, the gold price can lead to either a significant drop or a significant rise in price over the course of the year. Though this is unlikely to change, it is important to be aware of the effect that this price changes can have on a wide range of industries.
With this in mind, there are a number of ways that trading commodities such as crude oil can benefit a number of business sectors for both better and worse when the price of commodities increases and decreases.
