CHAPTER 2

A Short History of Commodity Markets

From grain fairs to global futures exchanges

Opening question

“Why did the first organised futures markets trade grain — and what does that history teach today's investor?”

In this chapter

Why farmers and merchants agreed prices before the harvest, and what went wrong
The Dojima rice market in Osaka and the Chicago Board of Trade
How standard contracts, margin and the clearing house created futures markets
Gold, the US dollar and the oil shocks of the 1970s
How oil and metals moved from posted prices to exchange prices
Commodity indexes, ETFs and the "financialisation" debate
Crises that changed the rules, from silver in 1980 to negative oil in 2020
Asia and Vietnam join the global commodity market

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 2 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Commodity Investing: From Theory to Practice (Volume 2, NXW Investment Library).

Read Chapter 1 free Get the full book — [email protected]

Sections of this chapter

2.1 Trading the harvest before it exists

2.2 The problem with forward contracts

2.3 Osaka and Chicago: the first futures markets

2.4 Margin and the clearing house

2.5 London and New York: metals, softs and energy

2.6 Gold, the US dollar and the 1970s

2.7 Oil moves to the exchange, and crises change the rules

2.8 Indexes, funds and financialisation

2.9 Asia and Vietnam join the market

2.10 Lessons for today's investor

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