Being practical is one of the most essential characteristics a person must have especially during this time of economic crisis. It is a must for a person to know and guard against the movement of commodity prices. A commodity price is the cost of basic commodities in the market today. It is also called the real time price. Real time price is greatly affected by factors such as the price of gas, which is considered as a daily commodity and the currency of your country’s money or forex price. It is important to know, more or less, how to predict or forecast a commodity price.
Here are some of the useful tips on how to forecast commodity prices:
- Demand and supply curve. In economics, as the demand for a real time commodity goes up, its supply must also go up to meet the demand. In response to the rising of the demand, the prices of the in demand commodity will naturally rise as well. There is a direct relationship between the demand for a product and its price. This is logical since as one demands for more, the suppliers are obliged to meet that specific demand, thus increasing its price. Wise consumers must observe the pattern of demand for commodities to be able to have an idea of its future price, especially when the threat of shortage is obvious. Shortage happens when the demand is greater than that of the supply. While surplus happens when the supply of a particular product is greater than the demand for it.
- Use commodity charts. There are websites on the Internet that provide free commodity charts for people to use. These commodity charts have a list of different products that people buy. They serve as a guide for consumers on what particular items to purchase, and which items are not really necessary. Commodity charts can help predict future commodity prices since it presents how in demand a product is. From there, the person using a commodity chart can assess whether or not the price for each commodity will change or will remain the same.
- Observe prices of other basic commodities. One of the factors that have a significant effect on commodity prices is the cost of gas. Gas is used for transportation of products from one place to another. That is why it plays a major role in the pricing of basic commodities. Monitoring the prices of gas on a daily basis will help a person predict future change in the prices of different commodities. If the price of gas gradually goes up, then it follows that prices of commodities will eventually increase as well.
- Foreign exchange. Foreign exchange in the world market is also a huge factor in assigning prices for basic commodities. Generally, when the value of a particular currency continuously increases, price of basic commodities essentially decreases and vice versa. Usually the cost of commodities depends on the price of gasoline and the value of a country’s currency in the world market.
Those are the four easy tips on how one can monitor or even predict the change in commodity price. The next time you watch the news, be sure to get as much information as you can that deals with the four suggestions stated above to be able to predict the future costs of essential products in the market.