Commodities – SumArtha

What are Commodities??
Broadly speaking commodities can be divided in two categories: Soft and Hard

Soft commodities are typically grown. Corn, wheat, soybean, Soybean oil, sugar are all examples of “soft” commodities. Many soft commodities are subject to spoilage, which can create huge volatility in the short term. Weather plays a huge role in the softs market, which makes predicting supply especially difficult.

On the other Hard” commodities are typically mined from the ground or taken from other natural resources: gold, oil, aluminum. In many cases, initial products are refined into further commodities, as oil is refined into gasoline. Because “hard” commodities are easier to handle than “softs,” and because they are more integrated into the industrial process, most investors focus on these products

Agriculture commodities
Non- Agriculture commodities

Benefits of Investing in Commodities

Diversification

Commodity returns have historically had low or negative correlations with the returns of other major asset classes, and may be used to diversify a portfolio. Other factors remaining same, diversified portfolios with low aggregate correlation tend to have lower volatility of returns. Therefore, diversification may improve risk-adjusted returns.

Commodities may react differently from stocks and bonds in various economic and geo-political situations, enhancing risk-adjusted returns and reducing the overall volatility of a portfolio.

Inflation protection

Changing macroeconomic factors (like inflation) tend to impact commodities differently from other financial products. Prices of goods and services rise in tandem with input prices, while prices of stocks and bonds tend to decline because of rising commodity input prices which put pressure on the economy and lower the value of future cash flows.

Hedge against event risk

Geo-political events like wars and supply disruptions due to natural disasters like hurricanes, droughts and floods may impact the supply of, and increase the demand for, certain commodities. Including commodities in a portfolio may act as a potential hedge against certain types of event risks.

Commodities are assets which varied daily and industrial use, they have been in trade from the start of civilization and would exist with mankind until eternity. Because of their varied and long standing uses they would always be in demand, but the supply and demand determine their prices. The short term volatility and lack of information in short term offers opportunity for the investors who can ride the wave of volatility.

Why SumArtha?

At SumArtha true to our vision to ride the big moves without trying to catch the bottom or exit the top opens us with significant profit making opportunities. Our team of experts guide you with the trend in the commodities to profit from the move.