Editing Commodity market (section)

==Electronic commodities trading==
In traditional [[Stock exchange#Major stock exchanges|stock market exchanges]] such as the [[New York Stock Exchange]] (NYSE), most trading activity took place in the [[trading floor|trading pits]] in face-to-face interactions between brokers and dealers in [[Open outcry|open outcry trading]].<ref name=highfrequencytrading2011>
{{cite news
|url=http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1211&context=dltr
|title=The rise of computerized high frequency trading: use and controversy
|first=Michael
|last=McGowan
|year=2011
|journal=Duke Law & Technology Review
}}</ref> In 1992 the  [[Financial Information eXchange]] (FIX) protocol was introduced, allowing international real-time exchange of information regarding market transactions. The [[U.S. Securities and Exchange Commission]] ordered U.S. stock markets to convert from the [[imperial units|fractional system]] to a [[Decimal|decimal system]] by April 2001. [[Metrification]], conversion from the [[imperial units|imperial system of measurement]] to the [[metric system|metrical]], increased throughout the 20th century.<ref name=decimal>
{{cite web
|title=Stock Market Goes Decimal: Complicated fractions abandoned in favor of pennies
|first1=David
|last1=Johnson
|url=http://www.infoplease.com/spot/stockdecimal1.html
}}</ref> Eventually FIX-compliant interfaces were adopted globally by commodity exchanges using the FIX Protocol.<ref name=FIXGlobal2011>{{cite web
|first1=Fred
|last1=Malabre
|first2=Don
|last2=Mendelson
|publisher=CME Group
|date=15 December 2011
|title=Commodities Trading with FIX
|url=http://fixglobal.com/home/commodities-trading-with-fix/
|access-date=29 November 2013
|archive-date=3 December 2013
|archive-url=https://web.archive.org/web/20131203025718/http://fixglobal.com/home/commodities-trading-with-fix/
|url-status=dead
}}</ref> In 2001 the [[Chicago Board of Trade]] and the [[Chicago Mercantile Exchange]] (later merged into the CME group, the world's largest futures exchange company)<ref name=decimal /> launched their FIX-compliant interface.

By 2011, the [[alternative trading system]] (ATS) of [[Electronic communication network|electronic trading]] featured computers buying and selling without human dealer intermediation. [[High-frequency trading]] (HFT) algorithmic trading, had almost phased out "dinosaur floor-traders".<ref name=highfrequencytrading2011 /><ref group="notes">In July 2009, when a high-frequency trading platform with proprietary [[algorithmic trading code]] used by [[Goldman Sachs]] to allegedly generate massive profits in the commodity market was stolen by [[Sergey Aleynikov]] there was widespread concern about the unintended economic consequences of HFT.</ref>

===Complexity and interconnectedness of global market===
The robust growth of [[Emerging markets|emerging market economies]] (EMEs, such as Brazil, Russia, India, and China), beginning in the 1990s, "propelled commodity markets into a supercycle". The size and diversity of commodity markets expanded internationally,<ref name=BankofCanada25sept2012>
{{cite web
|url=http://www.bankofcanada.ca/2012/09/speeches/financing-commodities-markets/
|title=Financing Commodities Markets presented to the CFA Society of Calgary
|first=Timothy
|last=Lane (Deputy Governor of the Bank of Canada)
|location=Calgary, Alberta
|date=25 September 2012
}}</ref> and [[pension fund]]s and [[sovereign wealth fund]]s started allocating more capital to commodities, in order to [[Diversification (finance)|diversify]] into an asset class with less exposure to currency depreciation.<ref>{{cite news |first1=M. Nicolas |last1=Firzli |first2=Vincent |last2=Bazi |title=Infrastructure Investments in an Age of Austerity: The Pension and Sovereign Funds Perspective |url=http://www.turkishweekly.net/op-ed/2852/infrastructure-investments-in-an-age-of-austerity-the-pension-and-sovereign-funds-perspective.html |work=Revue Analyse Financière, volume 41 |date=2011 |url-status=dead |archive-url=https://web.archive.org/web/20110917182931/http://www.turkishweekly.net/op-ed/2852/infrastructure-investments-in-an-age-of-austerity-the-pension-and-sovereign-funds-perspective.html |archive-date=17 September 2011}}</ref>

In 2012, as emerging-market economies slowed down, commodity prices peaked and started to decline. From 2005 through 2013, energy and metals' [[Real prices and ideal prices|real prices]] remained well above their long-term averages. In 2012, real [[food prices]] were their highest since 1982.<ref name=BankofCanada25sept2012 />

The price of gold bullion fell dramatically on 12 April 2013 and analysts frantically sought explanations. Rumors spread that the [[European Central Bank]] (ECB) would force [[Cyprus]] to sell its gold reserves in response to its [[2012–2013 Cypriot financial crisis|financial crisis]]. Major banks such as [[Goldman Sachs]] began immediately to short gold bullion. Investors scrambled to liquidate their [[exchange-traded fund]]s (ETFs)<ref group=notes>Exchange Traded Funds revolutionized the mutual funds industry when they were introduced. Exchange Traded Commodities, sold first by pioneering investors group Barclays Global Investors (BGI) (now owned by BlackRock)  revolutionized the commodity market. By the end of December 2009 Barclays Global Investors (BGI) assets hit an all-time high of $1&nbsp;trillion ($1,032 billion).</ref> and [[Margin (finance)|margin call selling]] accelerated. George Gero, precious metals commodities expert at the [[Royal Bank of Canada]] (RBC) Wealth Management section reported that he had not seen selling of gold bullion as panicked as this in his forty years in commodity markets.<ref name=Forbes15apr2013>
{{cite news
|url=https://www.forbes.com/sites/afontevecchia/2013/04/15/violent-and-panicky-gold-selling-collapse-bullion-and-commodity-markets
|first=Agustino
|last=Fontevecchia
|magazine=Forbes
|date=15 April 2013
|title=Violent And Panicky Gold Selling Collapse Bullion And Commodity Markets
}}</ref>

The earliest commodity exchange-traded fund (ETFs), such as [[SPDR Gold Shares]] {{NYSE Arca|GLD}} and [[iShares]] Silver Trust {{NYSE Arca|SLV}}, actually owned the physical commodities. Similar to these are {{NYSE Arca|PALL}} ([[palladium]]) and {{NYSE Arca|PPLT}} ([[platinum]]). However, most Exchange Traded Commodities (ETCs) implement a [[futures trading]] strategy. At the time Russian Prime Minister [[Dmitry Medvedev]] warned that Russia could sink into recession. He argued that "We live in a dynamic, fast-developing world. It is so global and so complex that we sometimes cannot keep up with the changes". Analysts have claimed that Russia's economy is overly dependent on commodities.<ref name=FinancialTimes17apr2013>
{{cite news
|title=Russia and less than $100 oil
|date=17 April 2013
|first=Isabel
|last=Gorst
|url=http://blogs.ft.com/beyond-brics/2013/04/17/russia-and-less-than-100-oil/#ixzz2QjfhfUBk
|work=Financial Times Blog
|access-date=17 April 2013
}}</ref>

===Contracts in the commodity market===
A [[Spot contract]] is an agreement where delivery and payment either takes place immediately, or with a short lag. Physical trading normally involves a visual inspection and is carried out in physical [[Market (place)|market]]s such as a [[Farmers' market|farmers market]]. [[Derivatives market]]s, on the other hand, require the existence of agreed standards so that trades can be made without visual inspection.

===Standardization===
{{confusing|section|date=March 2022}}
US [[soybean]] futures do not qualify as "standard grade" if they are "GMO or a mixture of GMO and Non-GMO No. 2 yellow soybeans of Indiana, Ohio and Michigan origin produced in the U.S.A. (Non-screened, stored in silo)". They are of "deliverable grade" if they are "GMO or a mixture of GMO and Non-GMO No. 2 yellow soybeans of Iowa, Illinois and Wisconsin origin produced in the U.S.A. (Non-screened, stored in silo)".  Note the distinction between states, and the need to clearly mention their status as GMO ([[genetically modified organism]]) which makes them unacceptable to most [[organic farming|organic]] food buyers.

Similar specifications apply for cotton, orange juice, cocoa, sugar, wheat, corn, barley, [[pork belly|pork bellies]], milk, feed stuffs, fruits, vegetables, other grains, other beans, hay, other livestock, meats, poultry, eggs, or any other commodity which is so traded.

Standardization has also occurred technologically, as the use of the FIX Protocol by commodities exchanges has allowed trade messages to be sent, received and processed in the same format as stocks or equities. This process began in 2001 when the Chicago Mercantile Exchange launched a FIX-compliant interface that was adopted by commodity exchanges around the world.<ref name="FIXGlobal2011"/>