Using fundamental analysis to predict commodity prices

Commodity prices will fluctuate in the short term, so it is not possible to make a basic forecast of the price of a commodity in short-term transactions. It’s even harder for new commodity investors. In order to minimize risk, novice or even experienced traders should use long-term fundamental analysis strategies. In the process of using fundamental analysis to predict commodity prices, traders should look for developing trends that are affecting supply and demand.

To get started with commodity fundamental research, there are many sources of government aggregated reports – USDA, Department of Energy, etc. Many major commodity brokers also publish fundamental research for politicians. your goods.

Look for trends

What you need to do is look for market trends. For example, if the supply of soybeans is at its highest level of the year that we plant at a disciplined level for this season. You will probably want to trade immediately to avoid the risk of future soybean prices trending down.

For long-term trends in commodities, fundamental analysis is easier to spot. But technical analysis is also popular because of its ability to capture short-term movements in commodity prices. Most professional traders want to know the overall picture of commodities using fundamental analysis and then using technical analysis to time entry and exit. That is the essence of the technical approach to commodities in the market.