Learning How to Trade Commodities

CHICAGO, IL - MARCH 15: A trader signals an o...

Image by Getty Images via @daylife

Commodities trading is the buying and selling of goods in a commodities market. The value of each commodity is directly linked to supply and demand. When supply decreases, demand will push prices up. Commodities traders watch for these trends in buying and selling to know what commodities to trade.

Buying and selling takes place in a commodity exchange. With this market, the trader can take part in more than one exchange at the same time, which makes it an attractive option for many investors. Finding exchanges may be as simply as locating businesses on Canada 411.

Setting up an Account

A trading account is needed for anyone wanting to buy and sell commodities. The first step is to decide what size account you wish to open. Many people recommend between $5,000 and $10,000, although some beginners start small with $1,000. One way to buy and sell is through a commodities broker or floor traders, who are the investors themselves. The commission involved should be outlined in advance, as some brokers can be expensive.

Set up a Strategy

Trading commodities is not a guessing game. It involves careful thought and an understanding of the global market. You will need to analyze trends in the various commodities market. Like with stock markets, success depends on knowing what are good commodities.

Understand the Terms

In commodities trading, you need to know the terms of the trade. These include commodities futures, risk management and commodity index. Learning the terms of trading makes it easier to grasp the basics of commodities trading.

How to Choose Markets

Traders can specialize in specific markets. Agricultural, energy and metal commodities are common ones. Technology and innovation have given rise to new commodities such as nanomaterials and silicon chips. There are also day traders and online traders. For some investors, this is more exciting than simply putting money in fixed deposits or other interest bearing accounts.

Filed Under: Free Trade, General Tagged With: , ,

What is the Softwood Lumber Dispute?

Article Content    The softwood lumber dispute is actually a collection of disputes between the United States and Canada that has continued for more than 20 years. The core of the softwood lumber dispute is that the United States claims that Canada is unfairly subsidizing the production of Canadian lumber. As suspected, Canada denies such a thing is taking place.  The majority of softwood lumber in Canada comes from Crown land, whereas US softwood lumber is primarily obtained from privately owned land. Canadian Crown land is owned by either the provincial government or the federal government. Each country has its own unique way of setting the price charged to corporations to harvest the lumber, causing the softwood lumber disputes.  In the US, logging rights are sold during a competitive auction. In Canada, the government dictates stumpage fees based on transportation and labor costs. The Canadian prices are typically much lower than the prices at the U.S. auctions. The US government is claiming that the low Canadian prices constitute a subsidy to Canadian producers and have taken a few action steps to ruffle the feathers of the Canadian government.  In October 1986, the US Department of Commerce (DOC) ruled that Canada was subsidizing lumber production through low stumpage prices. The Canadian and American government agreed to a 15 percent ad valorem tariff on softwood lumber from Canada. In 1991 Canada terminated the agreement because new policies were in place that they felt no longer constituted a subsidy. The DOC disagreed and implemented a 6.51 percent ad valorem tax on imported softwood from Canada, which was appealed by the Canadian government and won.  The two countries could not agree on the pricing of softwood and continue to dispute this situation. There have been four investigations by the DOC in the past 20 years. The Canadian government shows no signs in changing how it harvests and sells softwood, and the United States shows no signs of backing down until they do.

Filed Under: Business Tagged With: , , , , , , ,

Canada & Europe Free Trade Agreement 2011

ContentCanada and the European Union (EU) have been discussing a free trade agreement since June 2009. As of December 15, 2010, trade representatives confirmed that the group is on track to signing the agreement by the end of 2011. Both parties are satisfied with the progress of the negotiations, which will resume in January in Brussels.

This is mostly about money, as most international agreements are, and it is reported that just the removal of tariff and non-tariff barriers would save at least 20-billion Euros, which is the equivalent of 26 billion US dollars. Canadian unions, farmers, and auto workers are not very happy about this pending agreement, regardless of the savings.

An economist, Jim Stanford, conducted a study that shows that a free trade pact between Canada and the EU will lead to a huge Canadian job loss and a trade deficit; Stanford estimates that anywhere from 28,000 to 150,000 Canadian jobs will be lost.

One other sticking point on this proposed trade agreement is that the EU wants to protect its geographical indications, which are trademark names for products that are named after a town, country, or region, which are viewed as intellectual property rights.

Canada is excited about the new Free Trade Agreement and compares it to the 1994 North American Free Trade Agreement (NAFTA), which eliminated tariffs on goods that circulate between Mexico, Canada, and the US. It only makes sense that Canada’s second-largest trading partner, The European Union, also have a free trade agreement, making Canada the first nation to have free trading with both the US and Europe.

For the long term, the seed has already been planted to create a deal that will combine the EU and NAFTA, which are the world’s two largest trading blocs. Though depending on who you talk to, this is or is not something that is currently being discussed.

Filed Under: Business, Economy Tagged With: , , , , , , ,

What is the Softwood Lumber Dispute?

Article ContentThe softwood lumber dispute is actually a collection of disputes between the United States and Canada that has continued for more than 20 years. The core of the softwood lumber dispute is that the United States claims that Canada is unfairly subsidizing the production of Canadian lumber. As suspected, Canada denies such a thing is taking place.

The majority of softwood lumber in Canada comes from Crown land, whereas US softwood lumber is primarily obtained from privately owned land. Canadian Crown land is owned by either the provincial government or the federal government. Each country has its own unique way of setting the price charged to corporations to harvest the lumber, causing the softwood lumber disputes.

In the US, logging rights are sold during a competitive auction. In Canada, the government dictates stumpage fees based on transportation and labor costs. The Canadian prices are typically much lower than the prices at the U.S. auctions. The US government is claiming that the low Canadian prices constitute a subsidy to Canadian producers and have taken a few action steps to ruffle the feathers of the Canadian government.

In October 1986, the US Department of Commerce (DOC) ruled that Canada was subsidizing lumber production through low stumpage prices. The Canadian and American government agreed to a 15 percent ad valorem tariff on softwood lumber from Canada. In 1991 Canada terminated the agreement because new policies were in place that they felt no longer constituted a subsidy. The DOC disagreed and implemented a 6.51 percent ad valorem tax on imported softwood from Canada, which was appealed by the Canadian government and won.

The two countries could not agree on the pricing of softwood and continue to dispute this situation. There have been four investigations by the DOC in the past 20 years. The Canadian government shows no signs in changing how it harvests and sells softwood, and the United States shows no signs of backing down until they do.

Filed Under: Business, Economy Tagged With: , , , , , , ,

Getting Involved in the Anti Free Trade Movement

Free trade is a great idea on paper. On paper a lot of things look promising. There are more than enough reasons to like free trade when you remove the human element from the picture. Reducing the cost of production and labor seems like a great thing for any nation. Free trade helps to do that. However, when those labor costs go down, so does the quality of life of the people who work to make those products. It can cost people jobs, or stave off the opportunity to get a job. It’s a difficult issue and one where action must be taken immediately.

If you are interested in working to stop free trade then the good news is that you can start immediately. There are organizations working all over the world who share the same passion you do about ending the free trade agreements.

The easiest way to get started is to join an organization. While there is always the option of starting your own, you should know that it is rather difficult and time consuming to start your own political organization. If you believe that free trade must be stopped immediately then you should consider joining an established organization that is well ahead of where you will be.  You can find what you’re looking for by using Canada 411.

Make sure you understand what the organization is about specifically. While these people are unified against free trade, that doesn’t mean they are all going about it in the same way. There might be those that are lobbying government officials or just looking to unify the common citizen. You should know where you want to make the biggest impact and join a likeminded group. Be diligent on your quest and align yourself with the right people.

Filed Under: Business, Free Trade Tagged With: , ,

NAFTA: The History Behind This Tri-Country Free Trade Agreement

NAFTA. Anyone who has followed free trade and free trade agreements have heard of these letters. It’s the North American Free Trade Agreement. The basic definition of NAFTA is that it is the agreement between The United States, Canada and Mexico that allows these three countries to trade freely between each other without the interference of the government in the form of taxes, tariffs and any other government involvement. While that is the basic idea let’s look a bit at the history of NAFTA.

The North American Free Trade Agreement originally started with negotiations between the three countries involved as far back as 1986. Canada and the United States had entered into a free trade agreement with each other. While it was widely unpopular, the two countries still operated under the idea of the treaty.

Shortly after signing the Canada-United State Free Trade Agreement, the American government decided to meet with the government of Mexico in an effort to come to some sort of joint agreement with that nation. Canada fearing that some of the agreements made in the Canada-United States agreement might be jeopardized with a United States and Mexican free trade agreement, asked to be a part of the negotiations with Mexico.

The three government officials met together in early 1992 to discuss the free trade agreement. Those officials were President George H. W. Bush for the United States, Carlos Salinas for Mexico and Prime Minister Brian Mulroney for Canada. These officials essentially came to an agreement together, which left it to each respective country’s legislative branch.

After some re-negotiations after a change in both the Canadian government with a new prime minister, Kim Campbell and a change in the United States president, Bill Clinton. All three sides agreed on a free trade agreement.

The United States Congress and House of Representatives quickly passed the new renegotiated agreement between the three countries and on January 1, 1994 the NAFTA officially went into effect.

Enhanced by Zemanta
Filed Under: Economy, Free Trade Tagged With: , ,

The North American Free Trade Agreement Winners

Bill Clinton had become president of the U.S. ...
Image via Wikipedia

The idea behind the North American Free Trade Agreement, or NAFTA, was to guarantee open and equal trade between the United States, Mexico and Canada. While the United States already had a treaty with Canada, there were some tariffs on goods and services between the America and Canada and plenty of tariffs on products from Mexico. Supporters of NAFTA, which became law on Jan. 1, 1994, said it didn’t make sense for neighboring countries on good terms to include taxes and restrictions on trade. It would be like creating an additional charge for someone looking for the best company to handle a home mortgage refinance, for example. Eliminating that additional charge and creating a free trade environment would boost imports and exports among the three countries.

While there are some in Mexico who complain that imports of U.S. agriculture hurt Mexican farmers, the statistics show that Mexico benefitted greatly from NAFTA. Mexico registered a more than six fold increase in exports to the U.S. in the period ending in 2007, according to U.S. government statistics. In that same period, the value of goods received by Mexico more than doubled. In Canada, more than 800,000 people gained jobs during the first 10 years of NAFTA, while the country’s GDP, or gross domestic product, grew by 3.6 percent.

While there was great concern in the United States that NAFTA would mean the loss of jobs and companies heading to Mexico to take advantage of cheaper labor costs, there are many statistics that indicate NAFTA was beneficial in America, as well. For example, nearly 27 million jobs were created during the first 13 years of NAFTA. Supporters of NAFTA also point out that unemployment stood at an average of 5.1 percent through 2007, while the average unemployment rate for the 13 year before NAFTA was 7.1 percent.

Enhanced by Zemanta
Filed Under: Business, Economy, Free Trade Tagged With: , , , , , , ,

Canada Ambassador States NAFTA Violated in Latest Import Bill

Acting Architect of the Capitol Stephen T. Aye...
Image via Wikipedia

According to Canada’s ambassador to the US, a current US import bill may be a violation of the North American Free Trade Agreement. He has since issued a warning on Capitol Hill over the legislation itself stating that the legislation would cause a negative impact on Canadian and US supply chains and jobs for both of the countries. The legislation he is speaking about is the Foreign Manufacturers Legal Accountability Act.

In a statement written to Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid, the ambassador states that he hopes the legislation that comes out of Congress will respect the international trade obligations of the United States.

What Is It?

The act has wording that would ban imports from some companies, specifically those that do not have an American agent. The law’s goal is to ensure that any foreign manufacturer that produces defective products can be held liable in the United States. The law itself stems from the recent Chinese drywall concerns where many Americans were sickened from the poor quality of the drywall. It is unlikely that the legislation will struggle to get through Congress since both the Republican and the Democrats have worked to develop the bill.

According to the ambassador, the situation is similar to that of the Buy American provisions that were placed into the economic stimulus package in 2009. It would lead Canadian manufacturers to face tougher restrictions and red tape even though neither law was meant to do so.

Understanding Free Trade

Free trade can be a difficult decision, no matter if you are the Canadians looking into the United States or the other way around. Still, it is important for all people around the globe to stay up to date on the latest legislation and news about free trade and consolidated credit news.

Enhanced by Zemanta
Filed Under: law Tagged With: , ,